iPhone SE

Apple has started assembling iPhones in India, with a trial run of its most affordable smartphone – the iPhone SE. This marks the first step into the huge Indian market, which Apple sees as a long-term growth market.

The phones are assembled by Taiwanese contractor Wistron, with operations based in Bangalore. The “Made in India” iPhones will specifically be for the domestic India market.

India law requires single-brand retailers to source 30 percent of their components locally, and to bring prices of their devices down.

Apple Store India
Pic cred: Getty Images

Apple looks to entrench itself in the India market as the global growth of its iPhone business slows down. Unit sales of the iPhone for the second quarter of 2017 was 50.8 million, for a total revenue of USD33.2 billion. Sales dipped 1 percent, although revenue per iPhone sold is higher.

In India, the smartphone market is dominated by Chinese phone makers which accounts for more than 50 percent of smartphone sales. Samsung is the single largest brand, with over 25 percent market share.

Apple, on the other hand, dawdles at just 2 percent.

The reason Chinese phone makers rule the roost is due to the price of smartphones. Based on IDC research, the average smartphone in India costs around USD155. Apple’s cheapest – the iPhone SE, starts at USD399.

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A long term game

Apple isn’t one to compete in the “junk market” and still makes most of its revenue from its top-of-the-line iPhone 7 and iPhone 7 Plus models. However, it does need to meet affordability price points of the Indian consumer.

It’s highly unlikely that Apple will slash prices in a big way, with the iPhone SE reportedly being sold by India resellers at USD320. The Indian government though, hopes Apple can drop prices by USD100.

Will the larger, long term potential of India make Apple change its pricing strategy? We’ll have to see.

Source: TheVerge, WSJ

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