Apple’s new iPhones are unlikely to help revive the company’s market share in India, with retailers fearing the Rs1 lakh price tag will be a drag on sales after the initial euphoria subsides due to the availability of more affordable Android flagships from Samsung and OnePlus.
Analysts project the Cupertino, California-based tech giant’s annual iPhone shipments in India may decline for the first time. Apple may dispatch about 2.4 million iPhones to India in 2018 compared with 3.2 million units in 2017, according to Hong Kong-based Counterpoint Technology Market Research.
The new iPhone XS and iPhone XS Max will be priced at record highs when they go on sale in India on September 28, after factoring in the rupee’s depreciation against the dollar and a 20% import duty, two senior industry executives said. The iPhone XR, touted as the ‘affordable flagship,’ starts at Rs76,900 and will be available from October 26, about two weeks before Diwali.
The company’s distributors in India have informed retailers that Apple will for the first time offer ‘affordability schemes’ such as cashbacks and easy EMIs on certain credit cards right from the launch date, unlike earlier, when they were introduced after a few weeks, the executives said.
“Despite the aspirational factor, the lakh-plus pricing has made the new iPhones unaffordable for a lot of consumers.
The starting price this time has gone up by almost 13% for the flagships, while for the affordable flagship it’s up by 20%. It’s going to be very tough,” said the CEO of a leading retail chain.
According to Singapore-based researcher Canalys’ manager Rushabh Doshi, Apple is staring at poor July-September and October-December quarters in India.
“While Apple will still see shipments of the new iPhones catering to the rich who seldom care about price, annual growth on shipment volume is unlikely,” he said.
Doshi said Apple’s shipments will take a hit also due to its strategy to engage with fewer distributors to ensure price control. The company has reduced the number of distributors to two from five. “For the same reason, earlier generation devices will be unsubsidised as was the case earlier. This will lead to lesser growth,” he said.
Counterpoint associate director Tarun Pathak said the pricing is likely to make India one of the most expensive places to buy the latest iPhones.
“20% custom duty for not assembling here in India is making iPhones costlier. To draw an analogy, Samsung’s Galaxy Note 9 global price is similar to iPhone XS but since the former is assembling in India, they managed to launch at Rs 32,000 cheaper than iPhone XS India price,” he said.
Apple’s share in the Rs 30,000-plus premium smartphone market in India, slipped to a record low of 13.6% in April-June from 29.6% a year earlier, with China’s OnePlus becoming the leader and Samsung No. 2, according to Counterpoint. Shipments of iPhone fell 40% in January-June from a year ago.
The executives said Apple has indicated that the iPhone XS and XS Max will be launched only in six or seven large cities in India initially and supplies will be limited to create a buzz.
“The new iPhone pricing is in line with Apple’s strategy of focusing on pricing alone instead of volumes,” said Prabhu Ram, head of the industry intelligence group at CyberMedia Research.
Apple may even gain share and lead in the October-December quarter on the back of the initial euphoria and the reluctance of other vendors to launch new devices in this period, Ram said.
“Apart from the die-hard loyalists, it might be difficult for Apple to sell the new flagship iPhones in India and the initial euphoria will be only for the first one month at most,” said the chief of a multi-state mobile phone retail chain.
Along with the launch of the new models, Apple is cutting prices of older iPhones by as much as 30% in India. Two models — iPhone 6s and SE — are assembled in India and would escape the 20% duty burden.