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How Apple finds itself alone in the luxury smartphone space

In India, the Apple iPhone 6s, iPhone 6s Plus have no competitors when it comes to pricing and for the Cupertino-tech giant this might just work.

Written by Nandagopal Rajan | Updated: November 15, 2015 8:51:32 pm
Apple, Apple iPhone 6s, iPhone 6s Plus, iPhone 6s Plus pricing, Apple iPhone 6s deals, iPhone 6s deals, HTC, Luxury smartphones, Apple India pricing, Apple iPhone 6s review, technology, technology news Apple iPhone 6s, iPhone 6s Plus are lone players in the luxury smartphone segment in India. (Source: Reuters)

Recently, when Apple launched its latest version of the iPhone here, there were a lot of oohs and aahs about the pricing. Yes, the iPhone 6s and 6s Plus have their highest pricing in India, but that is no reason for people to suggest that it was pointless to buy an expensive phone like that. Of course, a Micromax phone priced at a fraction of any Apple phone can also get the job done as some have suggested, but it is not about getting the job done, is it?

I have to bring in an analogy from the auto industry. We have quite a few multi-crore Ferrari’s roaring around Indian cities these days, but that does not mean those people should have just bought a Tata Nano or Maruti Alto as these very affordable cars too can get the job done of getting from point A to point B. In fact, the people who buy these top end cars would rather not have a car than be found dead in one of the cheaper models.

It is a bit like the water-diamond paradox, given that a car like the Alto is cheaper to acquire, cheaper to run, cheaper to maintain and cheaper to own if you look at how difficult, or downright stupid, it would be to even park a Ferrari in most parts of India. Still the loud gas guzzling two-seater commands a superb premium.

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And that is the kind of space Apple finds itself in India at the moment. By some strange quirk of fate the new iPhones are in a pricing bracket where it is alone, really alone. And it is not so in the rest of the world, where the barrier to owning an Apple iPhone is not that high thanks to extended contracts that make it an affordable monthly cost instead of a large one-time payment as in India. In markets like the US, Apple makes more money by selling the ecosystem and not the device itself.

Watch our Apple iPhone 6s Plus review

India is different and Apple does not seem to be looking for a volume play here at the moment, at least not with the latest models. However, there is surely a lot of value in being in its new monopolistic spot. For one, I am convinced that smartphones lose their price elasticity after a point — in India, I would put this at around Rs 50,000. Once you hit that point, price really does not matter.  Those who can afford to buy it will do at at any cost in that range. If there is intention to spend Rs 50,000, it is not tough to get that person to spend Rs 10,000 more. But if the intention is to buy something that cost Rs 12,000 it is near impossible to get that person to move to a Rs 15,000 price point and that is why the price competitiveness is much more in the mid-range segment.

Apple, meanwhile, has its entry pricing at Rs 62,000 with its new phones, a bit ahead of its biggest competitor Samsung’s costliest phones. If you go into the upper ranges, say the 128GB iPhone 6s Plus, there is no one to even offer competition. Of course, there is the Vertu where you are buying a statement and not really a very practical phone. But it is almost the same mindset that Apple will play to at this price point, trying to appeal to people who just want to say they can own one of these phones. If you are still comparing the iPhone with a budget Android, then you should be clear that you can’t really afford an Apple phone. If you are buying the phone on an installment, let the credit card gods help you.

Of course, you could choose not to be part of Apple’s ecosystem and go for an expensive Android phone like the Samsung Galaxy S6 edge+ and there price won’t be the consideration as you can afford both the phones and have made an informed choice.

Meanwhile, there is a good possibility that over the coming months you will see some premium brands come out in this segment. Personally, I think HTC has forgone its chance to be the one premium phone competitor for Apple.

The Taiwanese smartphone maker had all the right ingredients — an eye for premium hardware, exclusive software and a decent ecosystem of apps — but seems to have lost its recipe for now. Samsung might soon start offering more expensive phones and try to secure a larger share of this premium segment. But I won’t be surprised if a lot of new brands start offering smartphones with unique style quotient and features at the top end of the high-end segment. The luxury smartphone segment has finally arrived.

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