Analysts said iPhone XS — priced at Rs 99,900-1,34,900 — and XS Max with a price tag of Rs 1,09,900-1,44,900 are not competitive in Indian market. The starting price for the base XS model is higher by 11% compared to iPhone X 64GB.
Apple’s latest devices, iPhone XS and iPhone XS Max may not be able to revive their flagging market share in India just as the anniversary edition iPhone X too could not. High cost of the ultra premium devices in a price conscious market, a 20% import duty on smartphones and a weak rupee could dent demand for the devices.
Analysts said iPhone XS — priced at `99,900-1,34,900 — and XS Max with a price tag of Rs 1,09,900-1,44,900 are not competitive in Indian market. The starting price for the base XS model is higher by 11% compared to iPhone X 64GB.
“iPhone X shipments were around 50-60% less than usually achieved by any Apple handset in India with major factor being high cost. iPhone XS too suffers from this. For instance, Samsung Galaxy Note 9 base model is over 30% cheaper than XS as it is assembled in India, even though their global prices are same. There will be buyers for top end models, but Apple needs to find a solution for import duty so that devices become more competitive,” Counterpoint Research’s associate director Tarun Pathak said.
iPhone X, which shipped 63 million units globally from launch last year till August 2018 and earned revenues of $62 billion, failed to pick up in India with cumulative shipments at a mere 6.3 lakh. It lost market to Samsung, One Plus and Huawei.
Pathak explained that with Apple, sales is usually from aspirational buyers and hardcore lovers, but many will opt for lower priced iPhone 6S, 7 or 8. “With prices of flagship handsets being high compared to brands like Samsung, many may not even venture in that direction,” he added.
For comparison, iPhone XR 64GB, the cheapest in 2018 line-up, is priced at `76,900. This is against Samsung Galaxy Note 9 128GB at `67,900, Google Pixel 2 XL 64GB (`60,999) and OnePlus 6 64GB (`34,999).
Counterpoint’s research director Neil Shah said Apple is still charging at least 15% extra premium per model and 25% at memory SKU level in India even after one discounts the import duties and weakening Indian Rupee.
Counterpoint said that Apple had a slow April-June 2018 in India as it underwent changes in its distribution strategy.
Besides, domestic assembling is yet to pick up signifying reliance on imports. The US-based company had just 1% market share in India during the quarter, its lowest in recent history.
Even in the premium space, which accounts for 4% of the Indian smartphone market, Apple had a weak January-March 2018, as demand for iPhone 8 and X series declined sequentially.
“Apple is pinning hopes on the upcoming festival season in India but the over `1 lakh price tag, the Rupee depreciating to record lows and import duty offers little window of opportunity. Even the iPhone XR, which is priced at `76,900-91,900 could face the same fate in October-December 2018,” a top executive from a leading retail chain said.
However, industry sources point out that with Apple’s ‘Brand First’ strategy and the tech giant cutting prices of older models, the sale of older handsets could pick up. It slashed prices of the popular iPhone 6S to `29,900, against the earlier `42,900, while iPhone 7 is priced at `39,900 for 32GB version, down from `52,370. iPhone 8 64GB now comes for `59,900 compared to `67,940 earlier.
Apple’s flagship offerings are priced on the upper side as these are at the cutting edge of innovation. But, on the other hand, it also offers devices at different price points to help consumer make an informed choice. The core idea being that products should have different price points with attractive purchasing options like cashback or zero interest EMIs, so as not to lose to competition.
Apple CEO Tim Cook in an analyst call in May 2018 said, “India, we set a new first-half record. So we continue to put great energy there… Our objective over time is to go in there with all of our different initiatives from retail and everything else. And so we’re working towards those things. It’s a huge market and it’s clear that many people will be moving into the middle class over time.”