The iPhone 4S is here within a month of its launch in the US and is priced at Rs 44,500. While that’s a steep price to pay for a smartphone, there are fans out there who cannot wait to own it. New Delhi-based financial planner, Rahul Kushwah, who has pre-booked the iPhone 4S with Airtel, says, “I know I could have got it cheaper from the US or Singapore, but I needed an Indian warranty on my device as I am prone to dropping handsets. Devices bought internationally do not carry an international warranty and then they need to be repaired in grey markets.”
Whatever may be the reason, analysts believe that Apple fans will make a choice between the older and cheaper iPhone models instead of the new iPhone 4S. The iOS smartphones’ installed base in India, according to Strategy Analytics data, is an estimated 700,000 units. Rahul Gupta, senior manager at Strategy Analytics’ global wireless practice says, “Buyers who have set their heart on iPhone won’t settle for any other brand. But iPhone 4S does not make sense at current prices and new feature of voice-control does not make a compelling push in markets like India.”
But low prices, in any case, have never been Apple’s selling point. The company, some argue, has never fought to dominate the masses in India. A sales staff representative at the Apple Store in south Mumbai notes, “At the time of iPad 2 launch, people would just drop in, make no store enquiries, and buy three to four tablet PC units in cash.” iMacs, which are priced at a premium over other desktops, too sell easily. “So, we know iPhone 4S will sell too but the more affordable older models like iPhone 4 will sell faster,” he adds.
Smartphones sales, according to Frost & Sullivan estimates, stood at 7.7 million out of a total of 172.1 million handset shipments in 2010 recording a 150 per cent year-on-year growth. Smartphones are increasingly gaining market traction and while these accounted for 4.5 per cent of total handset shipments in 2010, their share in the pie is expected to increase to 6.8 per cent by 2011 and touch 30 per cent by 2017.
Abhishek Chauhan, senior consultant (ICT practice), Frost & Sullivan, says, “The iPhone 4S pricing looks staggering including the data plans that operators have put out. This means that only the affluent will buy the device.” Chauhan adds that older model, iPhone 4, is set to get a leg up as it’s priced almost Rs 7000 cheaper than iPhone 4S.
Price is not a barrier for buyers like Gurgaon-based Harinder Singh Sodhi, who bought the iPhone 4S 32GB model for Rs 50,900, it is a matter of brand loyalty. “I have been using Apple products all my life and iPhone 4S is an upgrade for me since I will now switch from iPhone 3GS.” The price that 4S commands is on the higher side and Sodhi says that he could have bought 2 netbooks in that price. “But it’s a device that you want to carry and show off to friends. It’s a head-turner,” he gushes.
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Chauhan of Frost & Sullivan adds that high retail prices will make customers turn to grey markets, online deals or procuring the unlocked iPhone 4S from international markets where it retails cheaper by nearly Rs 10,000. “Our estimate is that 70 per cent of the iPhone’s installed base in India today has been bought from international or grey markets to avoid higher taxation and import duties,” adds Chauhan.
According to a study conducted by research firm GfK, 84 per cent of iPhone users said they would pick iPhone also when they replace their mobile phones. While 60 per cent of consumers who use smartphones running Google’s Android said they would stick with phones using the same software.
Hemant Joshi, partner of Deloitte Haskins & Sells reasons, “High-end phones are like the BMWs of the market. Everyone wants to own them, but only a few have the purchasing power.” He believes that in India for any product to be commercially successful it has to be made affordable. “But niche products like smartphones for Rs 40,000 and above are respected by the upper middle class ,” Joshi says.