How much would you pay for an iPhone in India?

Sales of the iPhone in India has been a lackluster affair till date. March 21 announcement could change that.

Rumors are agog that Apple is getting ready to launch a 4 inch version of the iPhone (call it iPhone SE).

According to Mashable.com, Apple will be announcing it on March 21. While we do not know much about the device, if the rumors are true, it will sell for between $400 and $500. If confirmed, the price is perhaps way too much on the higher side. Why, you ask? For this, let us look at the intended markets for this product:

At this price point, Apple will clean up the Smartphone market in India.

The iPhone market is showing signs of maturity (or saturation) as the numbers for the latest quarter indicate. Apple is now selling iPhones to an installed base of more than 550 million users with a variety of desires, wants and needs regarding their Smartphones. Apple is making a bet that it is time to expand iPhone development to three different screen sizes in order to appeal to the 20% of the user base that prefer single-handed iPhone usage over larger screen options. Releasing a new 4-inch iPhone would be an admission by Apple that the only way to maintain a vibrant iPhone upgrade cycle is to expand the iPhone line. The following picture shows the distribution of iPhone as a function of display size. These are worldwide numbers.
iPhone sales according to the display screen sizes
Despite 4.7-inch and 5.5-inch screen phones being in the market for well over a year, approximately 50% of iPhone users are still using either a 4-inch or 3.5-inch screen. In fact, 11% of the iPhone user base is using an iPhone that was released more than four years ago and discontinued in 2014. Which means, due to the expanded role of iPhones in our lives (Apps that do many things such as Health monitoring, GPS services (Radio Taxi) etc.), the replacement cycle is getting pushed out. Add to that the fact that the most frequently failing component, the battery can be purchased online along with the replacement kit instructions, and you can see how a value conscious consumer will try and coax life out of a functioning iPhone!

Apple has just applied for a license to sell a pre-owned iPhone in India

Perhaps this is why Apple has applied to the Indian government to sell pre-owned iPhones. I can tell from my conversations with my NRI friends that such a network (of hand me down iPhones) has been in process for several years! Pre-owned, refurbished (call it by any name, it is still an iPhone) may have a market in India provided they are priced right. But back to the main question… How much would the average consumer pay for an iPhone in India?

Ideal price for iPhone SE – To set the price for an iPhone, we should look at what the competition is priced at. An entry level Android Smartphone can be purchased for about ₹3000 ($45) but if you throw in an 8 Mega pixel camera, front and back cameras, 1080p HD video resolution, Apple Pay support how much will the customer be willing to pay? My guess is ₹9995 ($150). At this price point, Apple will clean up the Smartphone market in India. Will they?


Note:
1. The conversion rate used in this article is 1 USD = 67.16 Rupees.
2. Text in Blue points to additional data on the topic.

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