OK, now I know I have your attention! In India, the 3G iPhone goes on sale today and people are lining up to buy a device that is seriously, and I mean seriously, expensive. Bharti Airtel and Vodafone (India) are the two carriers who are selling the device in India.
On the Bharti Airtel network, the device is going to cost between $730 and $830 dollars, depending on the device you buy. Furthermore, the device is locked to Bharti’s special network. So for a family of three (mom, dad and a kid), the 3G iPhones will cost around the same as Tata Nano, the $2,300 people’s car that launched earlier this year.
The high cost isn’t stopping people from wanting the device. About 200,000 phones have been pre-ordered. “I must assure you that we are not making any profits by selling the iPhone 3G. We are only providing network services and the prices have been fixed by Apple,” Sanjay Kapoor, president, mobility, Bharti Airtel told a local blog. More than 30,000 unlocked first generation iPhones are already running on Bharti’s network.
And you’ll also be surprised to hear about the different tariff plans .. http://www.labnol.org/gadgets/iphone-3g-tariff-plans-of-vodafone-india/4269/
You pay anywhere between $12 to $25 per month but still there’s a limit on data transfer.
As shocking as the price is, the 30k unlocked first gens should have been a good indicator as to the demand. And the apple streak continues…
Mr. Steve Jobs,
Thank you so much. Business has been down for me lately. You know how hard it is to complete against all these swanky malls who sell stuff at the same cost as me. I was going to close shop.
And then you launched your fancy new iPhone. A product everybody is drooling over. Not only do you launch it in India, you price it for 3 times what you sell it for in the US.
Not only that you make it so easy to unlock it. Click Click and I have an unlocked phone which for all practical purposes is the same sold through those dastardly official channels.
Thanks to you I have a thriving business. And think about the margins !
I think you are God and me and my colleagues here at the Delhi gray market are making a small glass shrine in your honor !
Steve Jobs Jeete Raho !
– Gray Market Man
They are going to reduce the prices in future. Apple is doing the same thing in India as they always do in US. First introduce the product at a high price and then reduce the price once the demand has saturated to some extent. In Marketing they call it skimming off.
But I guesss biggest apple fans will end up spending more.
Great comment, Gray Market Man.
Gray Market Man zindabad!
Where is the Gray Market Man going to get his iphones from without the AT&T contract? ebay? they also jacked up their price and it is no less than 800 ?
Good luck
Hey All,
The exorbitant pricing is actually a function of cost, in my humble opinion. Getting the phones to India is quite expensive. But that’s not where the real cost is.
Bharti is including 500 MB of data per month for 12 months with the cost of the phone. So if the data is free, where is the data revenue going to come from? Apple doesn’t get subsidies anymore from carriers so they need to make up the cost somewhere else. Hence the cost of the phone. By my math, a 30 dollar data plan for 2 years is 600 dollars. 200+600=$830.
Now that’s not taking into account unsubsidized pricing. We can go into the math of cost for 500 MB of data to Bharti, but I’d wager it’s under 5 dollars a month.
Also, I can hardly believe that the average iPhone user on Bharti uses 110 MB of data over GPRS. That’s a 10 Kbps connection if I’m not mistaken. So using 110 MB would take a considerable amount of time. Not necessarily an absurd amount of time, but enough to where I would be suspicious of the average user utilizing this amount.
Apple’s marketing and pricing has to vary by region as some areas don’t provide the infrastructure for Apple to maximize it’s product.
-Dazed And Confused
India has wide disparities in income, sales of phones at prices over 20k would be relatively limited, and even more limited at above 25k and this segment may not be price sensitive. They have obviously done their math and seen the numbers at lets say 20k, 25K, 30k this being the price insensitive market segment would be more of less the same and reconciled to a limited market, or the numbers at 20k were not compelling enough so why not keep the extra 6-10k.
Affordable aggressive pricing would have been below 20k ($400), probably near the 15K region but would they get enough customers at that price to cough 800-1000k plus a month on plans to recoup the subsidy. I think they know the market will be limited so why no use the ‘cream strategy’. They can also use it as a marketing/branding exercise and tap into high value consumers.
But at 31k they should really not be locking it, that makes a mockery of the ‘subsidize hence lock’ business model. For the tech savvy crowd looking forward to the iPhone reaction in the forums has been outrage at the perceived profiteering. This is going to a niche with snob appeal and its clear from the pricing that’s exactly how it Airtel/Vodaphone/Apple trio intend to a market it. So features and other things are really not the factor and techies who would appreciate these are probably not going to be able to afford it or see enough value at 31k-36k.
Wow and I was complaining about AT&T’s prices… that’s pretty insane!
I had prebooked for a iphone in vodafone India and was literally shocked and laughing when I received their sms indicating the prices! 🙂 Actually preordering is not a sale as someone has to pay 10K advance (200$) to book it and then pay the full amount. I never bothered about proceeding with this after their price. It is an absolute ripoff that it is locked after paying this monstrous margins airtel / vodafone is trying to make! 95% of people who prebooked wouldn’t buy the phone because of cost! When I can get a 1st gen iphone unlocked at 400-500 USD why would I end up paying for a 3G phone when there wouldn’t be any 3G for atleast couple of years. Btw prebooking is just sending an sms expressing interest in iphone which everyone would do 🙂
me too wanted buy this new toy. looking at the stupid pricing have to defer buying; there’s no 3g service either. wondering if there’s a way to recall my pre-booking SMS? 🙂
Since I’m going to buy one in India soon, here’s some optimistic thinking on why this isn’t actually that bad. Some back of the envelope calculations:
US Cost for 2 years on 8GB Model:
phone:199$ + plan:70$*24 months = 1,879$
India cost for 2 years – 8GB Model:
phone:711$ + plan: 18.3*24 = 1,141$
There’s no 3G in India and data plan is not unlimited (but how far can you go on EDGE), but we are paying 738$ less too, so doesn’t look that bad
Dear Om,
Am a fan of your blog,and is mostly gospel to me your writing. However, think you are missing a point here. Slowdown as such is yet to hit, and people are still flush with money, given outsourcing boom of past few years. So actually think pricing higher is a better branding strategy for Apple than hitting what marketers are describing as sweet spot. Heck my mom knew of iPhone’s launch so many weeks ago.
By retailing it at so much, Apple is ensuring that having it not the same as knowing about it.
Regards,
Vibhas K Dhingra
@ SpungeBob: I agree with Mr.GrayMarket. The cracked iPhone has been available in India since the past 6 to 8 months for $ 360 (by today’s rate of conversion for the rupee) and I know friends who are using it on local networks without any hassles. Where is Mr.GrayMarket getting it from? Duh … that’s a trade secret.
Grey Market Man for President!!!! Heh
Dude,
You are seriously out of touch. There are no serpentine queues (50 people in a city with close to 20 million is no people) for iPhones in any city in India. The prebooking interest was tremendous, but it waned after the price was announced. And prebooking did not amount to sales.
Apple doesnt have a cult following in India (the apple cultists in India must be roughly about the same number who lined up for the iphone) , and there has been widespread criticism of both the phone and its launch in Indian newspapers. It is not a device that suits the indian mobile usage , where people love to fwd SMS, have no access to 3G n/w, rarely use phones for internet access, and on ever rarer circumstances, actually make a purchase using their mobile. Indians prefer to use bluetooth and mem chips for data transfer, neither of which is supported by the iPhone.
(And the Nano hasn’t yet been launched in India, it has just been announced. not even one car has rolled out yet.)
It sells.. If you can sell your product at $890 why would you sell it for any less? They are a for profit company.
// The high cost isn’t stopping people from wanting the device. About 200,000 phones have been pre-ordered. //
THAT IS WRONG
everyone booked before Indian prices were announced…. believing Steve Jobs $199 anywhere in the world deal …
Price was announced only 2 or 3 days before the launch … and you will see how many iPhones are being sold
I am an Indian who prebooked for iPhone at both Airtel and Vodafone as I want to buy it officially after seeing the unlocked iPhone of my uncle. I already knew iPhone’s limitations and plus points. But after seeing the price, I was shocked. Except few people in high end segment who buy trendy things just to show off in their circles, no one will buy this overhped and overpriced phone. Technical people who knew about its features will never buy this phone at those prices. That’s why there is no “iPhone mania” in India.
In the end it’s all about supply and demand, if there is enough demand at that price point then good for Apple. I haven’t bought one, don’t plan to.
Not just in India. I did 4 scenarios for iPhone TCO (total cost of ownership) and scenario 3 and 4 show 5 year cost at over $ 15,000 and 20,000…with the soft auto market you could buy or lease a car for less…see below
http://dealarchitect.typepad.com/deal_architect/2008/07/atts-iphone-3g-ad-campaign-needs-many-more-asterisks.html
tons of wealthy people in india, look at n-95 sales and you can see that …
not mentioned, the government tax .. it is 15% on computers i believe, and then there is vat …
the worst thing, the data network is not very fast.. iphone is mostly for making an impression, me thinks
Apple iPhone costs Rs 31000/-and Rs 36000/- respectively. Thats way too expensive and even if iPhone sems pretty to look at, the response isent that high as per expectations. Also, 3G is asent in India right now. Its a huge waste of resources..
Similarly, while Mr Tata might be proud of introducing a low cost car, but unplanned urbanization in India and poor road infrastructure wil do nothing, but create huge mess…Years ago, Mr Bajaj created rikshaw hoping that it will serve as a good mass transport system, but unplanned urbanization, poor regulations made the rikshaw the most polluted vehical ever known…I can already se that Nano might replace therikshaw and create more pollution..and not to mention the huge traffic jams it might create, after all, Indian road system arent the best of world..Someone please stop this…
Very interesting to read the India natives comments. Although I have read from other ones that they can’t wait to get their iHands on their new iPhones.
So I guess that with so many million people there will be many many different opinions and situations.
Apple is not known to be dumb, I’m sure they have sent a man expressly over there to get the feel of the situation before even thinking of offering the iPhone to local carriers. They are professionals, they have conducted statistical market research, they must have gotten the Nokia numbers too.
I guess that in India Apple will be a niche market player. Well, so what? They’re used to it, they’re experts in it. But being a niche market in India means to have many millions of iPhones out there!!!
And I don’t have many doubts Apple will develop a less expensive EDGE/GPRS “nano” iPhone because think about this – out of my head I’m thinking that if you get China and India together (I mean cellphone subscribers) you’ll get almost half of the world. I think that’s big enough to command a specially developed model.
I’m sure Apple will develop an iPhone that will address the specific developing world needs and worldwide users that don’t make such demanding use of such a device.
It’s probably ALSO in view of this that Apple has positioned their existing iPhone 3G model and launched it to set the path for the upcoming new models – iPhone 3G is not a model for developing world hence it is set as an elite device, rightfully so.
Greetings to India from Portugal, Europe!
Why do you need a IPhone?
It’s nothing but hype. Average user of phone in India – uses it only to send text messaging and missed calls.
$1400+ for missed calls and text messaging!!! insane.
One would rather buy a round trip ticket to USofA for $1400 and pick up a $199 phone from a AT&T counter right at the airport.
Welcome Globalization.
I think the hype about iPhone from the media does not translate into strong sales in India.
Yes, there will be a market for it among techies and those who want to possess the latest tech bling, but other than that you are not going to see the kind of adoption that Nokia or SOny Ericsson has in India.
Plus there is no 3G network in India and iPhone does not offer half the features that Indian consumers are used to like bulk SMS, video recording etc. It is amazing the way Indian consumers use their mobile phones when compared to those in North America or Europe.
I suspect the iPhone clones will take off in a big way in India (like Mr. Gray Market points out) just like the high-end Nokia clones have taken off. Or, if people want to buy a legit iPhone they will get their pals who live abroad to get it for them, which is pretty common.
It will be interesting to see how many of those who pre-booked the iphones actually end up buying them.
Kamla
Om,
It is nice to see you linking our blog (www.cellpassion.mobi) not once but twice in your post. But I fail to understand why were you shy to name the blog as the source as most of the stats apart from Bharti’s statement quoted by you are from there? You have been an inspiration for us and we respect you, but calling us a “local blog” rather than naming us is something that we do not subscribe to. Just for the record, we have been regularly breaking global stories, especially when it comes to cellphones and are not limited to events happening in India alone.
Btw, Vodafone has slashed the price of the iPhone 3G by Rs 2,000 (http://cellpassion.mobi/2008/08/23/vodafone-slashes-iphone-3g-prices-in-india.aspx).
Cheers!
Rajat
Apple sucks big time !! It is most monopolistic , closed source company on earth and its only for rich fashion conscious folks or folks hypnotized reality distortion field created by apple , M$ seems to more open company than apple , its closed source evil which is bad for industry and has a bad karma ,look itunes it locks you to apple products now has a monopoly over music industry . Reality distortion field which Mr Steve Jobs & co creates is amazing .He is evil dictator who operates through restricting your choice through vendor lock in , proprietary hardware like itunes , carrier lock in , and hardware lockin (you cant even change the damn battery your self) , s/w lockin (mac softwares doest work on any posix or unix/linux system , even though they have copied thier code from bsd unix )
Do not buy any apple product because you would locked in and become steve slave for ever .
We need a revolution in open source to counter it where we put together the best UI experts not only best programmers in the world . and better coordination between hardware vendors and developers . Great open source sw combined with cheap hw in China /taiwan and some marketing teeth and mass markets in Asia will blow apple away .Our company is working on similar projects to get rid tyrants and dictators. Apple your time will come
Here is my take on it
http://moneymanagement.wordpress.com/2008/08/23/iphone-anyone%e2%80%a6naaah/
IPhone seriously needs to rethink in India
I guess the fact that 3G in India is still a few months away,the best thing would be to wait till then and then buy one.The prices would also have come down by then.However its still sad that in spite of having killer looks and some cool apps the iphone has no basic features like video recording,comes with only a 2mp camera ,no copy paste,no expandable memory,no MMS.
Status symbols will always be a part of any culture.
People in india, here if you want and iphone unlocked go visit the website and own it and don’t need to pay $830 or $730 its really cheap i got one from there and works like charm. i hope it helps.
ohh sorry i forgot to mention the website……its ( http://www.wherecanibuyiphones.com)