On Monday, when hundreds line up outside 1, Infinite Loop, the headquarters of Apple, Inc. in California’s Cupertino, they will be expecting a few surprises. Despite all the rumours and leaks that precede an Apple launch, the guys who call the above address their headquarters always have a couple of things that result in some oohs and aahs in the crowd and later adds to the must-have value of the products launched.
The new devices will be no different. The world seems to agree that Apple’s big gamble is a smaller, cheaper iPhone with features similar to its top-end devices. The surprise here has to be the price.
While iPhones are available across price points thanks to Apple’s strategy of cutting the price of older models when a new one is launched, it is rare for a new device to enter a lower price band. The only exception to this rule has been the iPhone 5C, which though not that success globally, was able to find acceptance among price sensitive markets and users.
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Tim Cook & Co might actually try and better what the iPhone 5C did with the new 4-inch phone. Expected to be called iPhone SE or iPhone 5 SE, this smartphone could be a bid to grow big in markets that are not traditional Apple strongholds. And when you put grow and big in the same sentence these days it has to mean India. Let us look at a few reasons why Apple might actually go big with the new phone in India.
Apple has done really well in China over the past couple of years. But growth there seems to have stagnated. This could be one of the big reasons why Apple had its first slow quarter in many years. Given that it does not figure in the top five smartphone sellers in India, there is a lot of potential for growth in the Subcontinent. It will need to tap into the kind of volumes India is still capable of throwing up to continue growing globally.
And the opportunity is very real. The Chinese manufacturers, spooked by Apple’s increasing stranglehold on their home market, has been making a beeline for India in the past few quarters. Their strength is clearly in the budget range, where the volumes lie. Their growth, driven by phones that offer more bang for their buck, has been at the expense of the Indian brands who used to play the same game.
But given the obvious manufacturing might, economies of scale and access to cheaper Chinese debt, the incumbents are much better at this game and do not hesitate to burn money for the sake of market share. This has helped companies like Xiaomi, Lenovo and Le Eco make serious inroads into the volume segments where phones are priced anywhere between Rs 5,000 and Rs 25,000. Apple is available in this segment only with older models and maybe, soon, with refurbished devices.
However, let’s imagine a scenario where Apple can offer the iPhone SE in the Rs 25,000- Rs 30,000 price band. A lot of buyers could forsake purchases in this band as well as a few notches below to own an Apple. It would also make a good upgrade for those looking to progress from mid-range smartphone, or even an older Apple. Yes, there is certainly and widow of opportunity and it is not small.
Even with a $450 price point, which could be around Rs 35,000 in India, Apple will have widened its base considerably offering another option for its customers. According to IDC, it already holds a major share of this segment with a 42.1 per cent share in above $300 smartphone market in India with the with the launch of iPhone 6S & 6S plus. But most of the cheaper options it has to offer are older iPhones.
Still, given that the company in question is Apple, it would be premature to put all your money on what is going to happen. While pricing the iPhone SE attractively for emerging markets might seem like a good bet at the moment, Cupertino is known to be less flexible about pricing products below a certain point.
But don’t be surprised if Apple puts India is the first wave of countries to the get the new iPhone with a price tag that makes it more than relevant.
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