Apple iPhone15 will remain pricey in India but expect discount on older models
On September 12, Apple introduced the iPhone 15 in India, marking the first time the company has assembled this model within the country. While consumers had hoped that the local assembly would lead to more affordable prices, Apple surprised them by taking a different approach. Instead of reducing the prices of the new iPhone 15, the company is opting to aggressively discount the previous iPhone models.
For the basic iPhone 15, Apple is pricing it at Rs 79,900, which is comparable to the previous year’s model, the iPhone 14. However, the prices for the Pro models have seen an increase, contrary to the widespread expectation of price reductions. The 1 terabyte (TB) version of the iPhone 15 Pro Max, for example, now costs as much as Rs 1,99,900.
Navkendar Singh, Associate Vice President at IDC India, has pointed out that it was unrealistic to assume that assembling iPhones in India would automatically result in lower prices. While Apple may save money by assembling the non-Pro models locally, the company is not typically known for lowering the launch prices of its new models.
Instead, Apple plans to channel its investments into marketing, improving the supply chain, and similar initiatives. More importantly, it intends to implement aggressive affordability promotions for previous-generation iPhone models, which consistently constitute a significant portion of Apple’s sales in India.
This strategy is justifiable considering that roughly two-thirds of Apple’s business in India is generated by the sales of older iPhone models, as pointed out by Singh. Apple’s market presence in India has been steadily growing, increasing from approximately 1 percent in 2019 to around 5 percent in 2023, and it continues to make progress, according to analysts.
In the first seven months of 2023 alone, Apple has already shipped over 4.5 million devices, and it is expected to reach a shipment range of 8.7 to 9 million units by the end of 2023, as noted by Tarun Pathak, Research Director at Counterpoint Research. This would represent a significant increase from the 6.7 million units Apple shipped to India in 2022.
The majority of Apple’s sales in the Indian market are attributed to previous iPhone models, which is understandable since the company consistently lowers the prices of older models with each new iPhone release, thereby making its phones more affordable in India, a market that sees an annual shipment of around 145-150 million smartphones.
As of the iPhone 15’s launch on September 12, a survey conducted by independent research organization TechArc, involving 1,200 users, revealed that approximately 63 percent of the respondents were inclined to purchase previous models of the iPhone. This preference for older models is primarily driven by the cost advantage, which holds significant importance in a price-sensitive market like India. According to Navkendar Singh of IDC, about 80 percent of smartphones sold in India have an average selling price (ASP) of less than $300 or around Rs 25,000, while Apple’s iPhones have an ASP of over $940 (approximately Rs 78,000), excluding Goods and Service Tax (GST).
Reducing the price of the iPhone 15 could have potentially resulted in higher sales, analysts suggest. Tarun Pathak of Counterpoint mentioned that, regardless of how small the price difference might be, Apple should have considered passing on the savings to customers to make the iPhone 15 more affordable in India, and the decision not to do so remains unexplained.
Naturally, as individuals switch to a different iPhone model, they typically sell their older phones. Mandeep Manocha, CEO and co-founder of Cashify, a used phone dealer backed by Amazon, noted that his company tends to purchase three to four times more iPhones than usual around September each time Apple launches a new iPhone model. However, specific numbers were not disclosed.
India has a sizable market for refurbished phones, with brands like Xiaomi (Mi) and Apple being among the top choices for consumers, as mentioned by Manocha.
Despite this, sales numbers for refurbished phones can be lower due to the competitive festive offers on new phones provided by e-commerce giants like Flipkart and Amazon. Manocha mentioned that October tends to be a slower period for their business because of the aggressive deals on new phones offered by these platforms. In the past, both Flipkart and Amazon have collaborated with banks like the State Bank of India (SBI) and HDFC to provide discounts on new iPhone purchases. Analysts anticipate that similar offers will be available this year as well.
Pre-bookings for the iPhone 15 are set to begin on September 15, with the devices becoming available from September 22, according to Apple’s official website. It’s worth noting that this marks the first time the company is launching its phones simultaneously in the United States and India. However, this move is not expected to significantly impact the demand for iPhones in the grey market.
Despite the discounts offered by e-commerce websites, analysts believe that customers in India will continue to purchase iPhones from the grey market. Popular grey markets for iPhones in India include Delhi’s Gaffar Market and Mumbai’s Heera Panna, where brand new iPhones are sold at a discount of approximately Rs 20,000, depending on the specific model.
In a grey market, unauthorized dealers sell the latest iPhone models at a reduced price but typically do not provide a warranty for the product. These sellers acquire iPhones from regions such as the US, Dubai, and other parts of the Middle East where iPhones are available at lower prices, allowing for a sufficient profit margin for the resellers.
While the iPhone 15 Pro and iPhone 15 Pro Max models are cheaper by approximately Rs 15,000 to Rs 20,000 in markets like Dubai, the non-Pro models see a smaller discount, typically around Rs 5,000 or remain at similar price points. This price difference continues to attract customers to the grey market despite official discounts and offers from e-commerce platforms.
Certainly, Tarun Pathak from Counterpoint Research has provided insights into the reasons behind the price difference in iPhone Pro models. Firstly, it’s important to note that the Pro models of iPhones are not currently assembled in India. While Apple does have assembly operations in India, they primarily focus on the non-Pro models. This distinction in manufacturing location contributes to the price differential.
Another factor contributing to the price difference is the relatively higher manufacturing costs in India compared to China. These increased costs are partially attributed to foreign exchange-related challenges, which can impact the final pricing of the Pro models.
Additionally, the sourcing of components plays a crucial role. While some components like cables are manufactured within India, other critical parts such as kits and modules are still imported. Importing these components necessitates Apple’s payment of duties and taxes, which subsequently drives up the prices of the iPhones.
However, there is hope for change in the near future. A research report by Bank of America analysts suggests that Apple may significantly increase its iPhone production in India. They anticipate that Apple could shift more than 18 percent of its iPhone production to India by FY25, marking a substantial increase from the 7 percent in FY23. This shift is expected to be driven by the production-linked incentive (PLI) targets set by the Indian government, which incentivize companies like Apple to manufacture more of their products locally.
