BW says iphone strategy in china could use lessons learned from its failure so far in India.
Andrew Ross/AFP/Getty ImagesTake the most talked-about phone in recent history and launch it in one of the fastest growing cell-phone markets in the world, and you’d expect fireworks. But in India, where carriers Vodafone (VOD) and Bharti Airtel (BRTI.BO) have been offering Apple’s (AAPL) iPhone since last August, unsold phones are stacking up at shops around the country. Apple won’t break down sales figures by country, but a senior Airtel executive confirms analyst estimates that total official iPhone sales here have yet to touch 20,000 handsets. Vodafone, which has a lower-key advertising campaign, has sold even fewer, the analysts estimate. Even including sales on the black market, where the phone sells for half the $700 sticker price, the total only increases by an additional 15,000, according to an Indian customs official. That’s puny, especially since Indian cell-phone providers have added nearly 20 million new customers since the iPhone’s launch last year.
In India, Apple has run up against some big obstacles. For instance, it has to fight against Nokia (NOK), a longtime favorite among local consumers. The Finnish company dominates the Indian cellular market and is tops in smartphones, too, with about 40% share.
The iPhone is also priced far beyond the reach of even many middle-class Indian consumers. Even though iSuppli, the El Segundo (Calif.) market research company, estimates iPhones cost less than $175 to build, both Apple and Airtel stuck to the approximately $700 price for the phone in India, vs. $199 with a two-year AT&T (T) contract in the U.S. In India, then, three iPhones equal one Nano, the $2,000 car that Tata Motors (TTM) launched in India just two weeks ago. An Apple spokesperson in London, Bethan Lloyd, said in an e-mail that pricing and tariff issues are decided by local partners, not Apple. Apple declined to make executives available for an interview.
A phone costing one third the price of a car? Granted the car is the $2000 nano. But still the price of an iphone is too high for mass adoption in India. What was apple thinking?