Although the Apple iPhone's India sales has seen a 400 per cent jump, its future in the country could well be spelled by how it will price its '5C' model.
Once again we find ourselves on the cusp of a new iPhone news cycle — a magical hodgepodge of rampant speculation, rumours, leaked photos and megaphone analysts.
Lost in the chatter over Apple’s supposed decision to release a new plastic-bodied lower-priced iPhone, dubbed the ‘5C’ by media reports, is the implicit admission that Apple’s emerging market strategy of selling its older models at cheaper prices has clearly been stretched to its limit.
For instance, in India, Apple currently sells its iPhone 4S and 4 models in the range of Rs. 25,000–Rs. 28,000 — a huge slash from the initial retail prices of Rs. 35,000-Rs. 38,000.
While this strategy has seen the company’s sales in India rocket by 400 per cent, it has been hard for the company to sustain the monumental growth - despite an an infusion of EMI and buyback schemes.
If indeed Messrs Cook, Federighi and Ive get up on that stage tomorrow and announce the release of the iPhone 5C, it will signify that Apple is ready to woo India — lock, stock and barrel. Indians will finally have an iPhone they can love, without it burning a hole in their pockets.
But more importantly, it should also signal the end of betting on sales of older models such as the 4 and 4S to boost its market share in India and other emerging markets, a trend that has rankled the Indian buyer’s pride. More on that later, however.
The next logical question is how low can Apple go? Or, in other words, what is the Indian sweet-spot in terms of price? It is this and the actual capabilities and features of the 5C that will decide the device’s success.
While most analysts have postulated that the ‘iPod touch + a mark-up for cellular capability’ is a hypothetical price benchmark for the iPhone 5C (bringing the phone in the range of Rs. 20,000–Rs. 22,000), to me it seems that Apple would do well to place and price the 5C right against a local challenger — perhaps the Micromax Canvas 4?
If Apple could get the 5C in the price range of Rs. 18,500, which is what the Canvas 4 retails at, it could tread the balance of making it affordable, yet not cheap enough to devalue the phone as a status symbol.
For that is the fate that Apple must dread and keep in mind: the iPhone is very much a Veblen good in India. People buy an iPhone more for showing off than for its actual functionality. If, for example, the iPhone 5C is stunted in terms of critical features or not given the latest Siri update, it could fail miserably.
If done correctly, the 5C has the potential to alter the Indian smartphone market in a very terrific fashion. Either way, Samsung and domestic players like Micromax should be watching tomorrow’s proceedings warily.