12864228 iPhone Launch in India

8/3/2019 12864228 iPhone Launch in India

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iPhone launch in India: Has Apple Dialed the Wrong Number?

India is now the third-largest Smartphone market in the Asia-Pacificregion, after Japan and China. Quarterly shipments are more than 1 million

units and the estimated total for the next three years is 19 million. But this isa small fraction of total handset sales. India is the world's fastest-growingmobile services market: In July, according to TRAI (Telecom RegulatoryAuthority of India) figures, it added a record 9.22 million subscribers in Julyto reach 296.08 million.

These large numbers of users are increasingly moving beyond basics and itcan be said that "As the need of Indian mobile phone consumers is evolving,they are demanding feature-rich devices, which can cater to their business communicationrequirements as well as their personal needs.

It is believed that Apple could gradually broaden the Indian market for the iPhone by

starting out with "leading-edge users who love to take on the challenge of a radicallydifferent device and can figure it out on their own." In the process, these leading-edge users"can not only help educate others (in how to use the phone), but also help Apple learn how toeducate the others."

Taking such factors into consideration, at midnight on August 22, Apple Inc., an Americanmultinational corporation, rolled out its iPhone in India and some 20 new countries. But itdidn't roll too far. Few basic reasons for the same can be summarized as follows:-

Some retail outlets of the two service providers that Apple has

linked up with -- Vodafone and Bharti Airtel -- discovered thatthey did not have the necessary permissions to stay open atthat late hour. Others attracted a small number of curiousconsumers. But missing were the lines and fanfare thataccompanied the iPhone's launch in the U.S. and some otherparts of the world.

Only a few buyers turned up at midnight launches done by both

Airtel and Vodafone across eight cities in India. Rival phonemakers in India were eager to claim victory in the first roundand say they were planning to build on that.

One reason for the lack of excitement could be the almost total absence of any

marketing. Newspapers reported the coming launch based on statements from Vodafoneand Airtel: Apple was nowhere to be seen. The local Apple office in Bangalore -- merelya sales and distribution set up -- was "not authorized" to make any statements. AndApple's Singapore operation, where press inquiries were directed, was not particularlyforthcoming.

Also, Vodafone and Airtel themselves are rivals. According to the Telecom Regulatory

Authority of India (TRAI), in June 2008, Airtel was number one in the wireless


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telephone market with 69.38 million subscribers and a market shareof 24.50%. Vodafone was number three with 49.19 million and17.2%. (In the number-two spot was Reliance Communicationswith 50.78 million and 17.7 %.) Cooperation between the twocompanies to promote the iPhone was not a likely scenario, and theadvertising campaign announcing its arrival had been bland andbasic.

Another albatross around the iPhone's neck is its Price. The 8GB

version costs Rs. 31,000 ($710) while the 16GB iPhone is priced atRs. 36,100 ($825). The corresponding prices in the U.S. are $199and $299. India being a price-sensitive market, these levels wereridiculous.

The reason for such high price of iphone is that, unlike in the U.S. and other countries,the service providers are not subsidizing the handset in India. U.S. carriers are able tosubsidize the cost of a mobile phone device not just because of contractual lock in

periods but also because the phone [itself] is locked so you can only use it with a specificcarrier. These practices allow U.S. carriers to recover their relatively high subscriberacquisition costs over the period of the contract. But in India, the majority ofconsumers use prepaid cards and can easily switch carriers. The economics are notconducive to subsidizing the phone.

Additionally, Bharti is asking for a deposit of 5,000 rupees, while Vodafone is

reportedly seeking twice as much.

Making things worse, India has yet to auction the frequency spectrum required by

mobile operators to start offering 3G, and a formal 3G launch is estimated to take up toa year. So even the rich, cool dudes who manage to get themselves an iPhone will only beable to enjoy the low-speed applications that they had access to anyway on their phonesearlier.

However, despite the lack of buzz surrounding the iPhone and other potential hang-ups, someWharton faculty saw a clever strategy at work where Apple was "testing the waters" andgetting prospective customers acquainted with its device before a full-scale marketingassault.

Skimming the Market

Apple can be said to have a smarter strategy for its IndianiPhone launch than is immediately apparent. If one compares[the iPhone's] U.S. launch to the India launch, it is a beautifulexample of the distinction between a 'penetration strategy'and a 'skim strategy . In the U.S., Apple basically wanted tobust the market open all at once. So, they had all these people


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lined up all around the block, and when they flipped the switch -- boom! -- the market existed. InIndia, it's almost like they are doing a test market.

Apple's India strategy allows for much more flexibility. It lets [the company] learn aboutthe market in a much cheaper, lower-risk way. Thus, Apple could use that extra cushion tounderstand how its early users react to the product and its features, evaluate its distributionstrategy and even reassess which service providers it should work with.

Also, Apple doesn't have a large installed base of Macintosh users in India, and that mayalso have persuaded it against a penetration launch for the iPhone . If one don't [have asignificantly large base], one must go with a skim strategy, because you can't create that marketovernight."

Despite the skim strategy, the company was myopic regarding its competitors and faced asetback.

Big names attached to the iPhone gave it high expectations and its price made it a flop.

The plan was good to take two big players together to enter the market. They thought

about strength but not about weakness.

A person in India who spends Rs. 31,000 for a product will never stand in a queue.

The iPhone's price made it only for a niche class, but they can easily get it from

foreign markets.

Apple didn't consider its rivals in India.

Nokia, Samsung, LG, BlackBerry all launched similar products.

India is a different market, where companies need to work on strategy. The mind-set of

consumers is far different from that of U.S. consumers.

Perhaps the company forgot that iPhone is not the only phone that has a touch

screen, music player, 3G, e-mail and all.

Needless to say, Apple (AAPL: Apple Inc) needs to rework its iPhone pricing in India if ithopes to attract a respectable number of customers in this poor but rapidly growingeconomy. Even if it doesn't, other mobile operators and other handset makers probably havemuch to gain from the iPhone's launch anyway.

The iPhone's biggest contribution to India will likely be the power of persuasion it bringsalong. For every iPhone user flaunting the smart phone's cool features, there could be at least adozen others who may want to upgrade their own phones to handsets that offer more features, butare more modestly priced. And several others may be tempted to explore the world of value-added services, in addition to voice and text messages.

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12864228 iPhone Launch in India