Tuesday, January 1, 2019

Lower Cost iOS Devices

Joe Rossignol:

The report claims that just one in four Indians own a smartphone, providing Apple with an opportunity to sell iPhones to millions of new customers in the country. The issue is that India is a very price-sensitive market, with more than 75 percent of the smartphones sold in the country costing “less than $250.”

Apple-authorized reseller Flipkart continues to sell the iPhone SE in India for around $250, but other iPhone models are priced between the equivalent of $325 and $1,950 in the country, well above the budgets of many Indian customers.

Simone Manganelli:

Apple’s incompetence here is absurd. This is so easy. Release new, low-cost, iPhone SE 2 with updated processor. You’ve already produced this phone at scale.

Nilay Patel:

Apple just dropped the price of the iPad to $229 on Amazon and Walmart. Apple just reached a deal to sell directly on Amazon, so it’s selling the iPad cheaper on Amazon than its own stores.

Michael Love:

This is a much bigger deal than the amount of coverage would suggest; Apple appear to have pulled off something with iPad that they’ve never managed with iPhone, differentiating the high-end $1000 model sufficiently that they can comfortably offer a low-end one for $200.

The iPhone 7 is currently $449 but that’s 2 years old, too expensive relative to Android + not cheap enough relative to the XR to be a game changer. Put an A12 in a 6/7/8 chassis and charge $300 and you’ll convert a lot of Android users while still making a healthy profit.

That they haven’t done this leads me to an interesting inference about services / accessories revenue, namely, it’s mostly coming from high-end users; the reason Apple doesn’t have a $300 iPhone is because they wouldn’t expect it to produce much more than that $300 in revenue.

Previously: 2018 iPhone Sales.

Update (2019-07-16): Tim Hardwick:

Apple has reportedly stopped selling iPhone SE, iPhone 6, iPhone 6 Plus, and iPhone 6s Plus in India, meaning anyone in the market for a new Apple smartphone will have to shell out more for a later model.

According to The Economic Times, the strategy indicates Apple is no longer prioritizing shifting iPhones in the country by volume and is instead refocusing efforts on increasing its revenue there.

8 Comments RSS · Twitter

The iPad’s back to retail price at Walmart, $280 at Amazon.

~$350 after pencil + tax is closer to what the iPad is worth to me. What kept me from buying it was a reminder that it only has 2GB RAM.

$250 in India? Does that includes Sales Tax? That is not a bad deal at all as most places around the world iPhone SE were mainly sold at standard price, unlike US where it was available in PrePaid SIM card for substantial discounts.

Yet another case where catering to the whims of shareholders is damaging to the long term health of a corporation.

Apple can absolutely make a less expensive smartphone. But they aren't because their shareholders will revolt if they reduce their profit margins and/or average sale prices.

Keeping average sale prices high ensures that they are failing to pick up customers all over the world are buying their first smartphone but who don't have the income at this time to justify buying a $500 or $800 phone. Many of those people will not stay poor forever, but when they do become better off, if they are comfortable with Android phones, what reason will they have to switch?

India was never going to be anything approaching a growth driver for Apple, and Tim knew it. Here's why.

The top 2% of all Indian households bring in more than $710 per month.
The top 0.2% are bringing in a whopping US$17,000 per year. That's 2.6 million people. (Source: https://www.statista.com/statistics/653897/average-monthly-household-income-india/ )

The tail keeps tapering rapidly before you get down to the irrelevant handful who can genuinely afford Apple gear. There was never any market for iPhones in India, and there won't be in the next 20 years.

Apple knew this and lied about the potential. Tim eventualy stopped telling these lies during the analyst calls as Apple pivoted to services income and increased concealment of the most basic sales figures.

Anonymous: This link suggests the market is much, much larger than you suggest and growing rapidly.


I should have summarized the link. The premium market ($500+) is 3% of the smartphone market which is itself 142 million. However the overall market is increasing rapidly and the premium market is growing at 43.9% YoY. So it's not a huge market, but is advancing rapidly. Further one could argue that Apple could compete in the mid range market too.

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