Apr 14, 2016
Apple Inc.’s new iPhone SE goes on sale in India on Friday, and it’s not cheap.
The company announced its cheapest-ever iPhone at its California headquarters last month, saying the four-inch device would go on sale for $399 in the U.S. With tax, the price of the phone is around $430 in most U.S. states, compared with 39,000 rupees ($586) including taxes in India, a 36% premium over the U.S. price.
The high cost augurs poorly for sales of the iPhone SE in India. While the company said the guts of an iPhone 6S–Apple’s most recent flagship phone–would be contained in the body of the smaller SE, the size of the device and its price will likely limit its appeal for Indian consumers, analysts say.
Apple CEO Tim Cook has said the company is betting on strong growth in India. India is currently only a tiny part of Apple’s business. The company shipped 1.9 million iPhones to India in 2015, giving it about a 2% share of the Indian smartphone market, according to International Data Corp. Globally, Apple iPhones accounts for about 14% of the market.
Most Indians prefer larger screens, like the ones found on the iPhone 6 and 6S, because a smartphone is often their only computer.
Apple may also struggle to compete with its own earlier models in India. A 16-gigabyte iPhone 6 sells for as little as 35,000 rupees onvarious e-commerce websites.
“At this price it’s competing against the iPhone 6,” said Kiranjeet Kaur, an analyst at International Data Corp.
The average price of a smartphone sold in India is about $200.
For Indian consumers, it may now come down to whether they care more about a faster processor and better camera, or screen size. “Are people going to want a better processor or do I want a bigger screen? I think they’ll want to go for a bigger screen,” Ms. Kaur said.
There’s probably little that Apple could do to bring down the price of the iPhone SE in India. Apple also increased the price of the iPhone 6S to $960 when it was first launched in India, compared with a starting price of $650 for the phone in the U.S.
Apple relies on third-party companies to ship the phone to India, which work in their own profit margins. The company also has to set a price that has a buffer for movements in the value of the rupee. And Apple doesn’t sell its products directly online or at stores, as it does in other markets.
There’s a chance that this might change in the future, if Apple opens its own stores.
For now, India’s Apple fans will have to pay a premium, or settle for an older device.
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Source: THE WALL STREET JOURNAL