Apple’s iPhone 5c sales expected to be tepid in subsidy-free India

“Apple Inc., ranked a distant eighth in India’s smartphone market, may fail to narrow the gap with leader Samsung Electronics Co. (005930) as a lack of subsidy from local carriers renders its cheapest new model unaffordable,” Kartikay Mehrotra reports for Bloomberg.

“The iPhone 5c, yet to be released in India, may start at $549, more than five times the $99 buyers opting for a plan in the U.S. pay,” Mehrotra reports. “Unlike the largest carriers in the U.S. including Verizon Communications Inc. and AT&T Inc., or China Telecom Corp. and China Unicom Ltd., Indian wireless providers don’t offer service contracts subsidizing the iPhone, leaving the handset overpriced for most Indians.”

“While smartphones including the iPhone help generate average revenue per user of $68.49 a month for U.S. carriers, India’s wireless operators, boasting the cheapest call rates in the world, have an ARPU of about $1.60, making subsidies not viable, according to Rajan Mathews,” Mehrotra reports. “Indian carriers have tried the subsidy model without much success, according to Mathews. When Reliance Communications Ltd., India’s third-largest listed mobile carrier, started its wireless service a decade ago, the company offered LG Electronics Inc. and Samsung handsets along with an introductory three-year contract for 21,000 rupees. Within months, users had stopped making their monthly payments and the company took a big financial hit, said Mathews. ‘People took the phones and disappeared,’ he said. ‘It’s impossible to enforce these contracts in India. There’s no way to recoup the cost of the phone.'”

Read more in the full article here.

MacDailyNews Take: These aren’t the customers Apple’s looking for.

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  1. I don’t think it’s wise to write off 1.2 BILLION people. Apple could easily capture a sizable market share if they would just lower their profit margins (and make up the loss on volume). Don’t they deserve iPhones?

    1. Dell got the market share and it just went under and got sold.

      Lenovo the Chinese ‘superstar’ of PC and cell phones made 215 m last quarter, Apple made 6900 m.

      Apple strategy is correct.

      1. Um is Apple selling its PC through subsidies? People buy mac becuase it worth for that price. but najority of iPhone are brought through subsidies hence the big success in US and failing in india where people buy at full price.

    2. What good is market share if it doesn’t lead to profit, though? That is what Android makers have yet to figure out. They can have all the market share in the world, but if you can’t turn a profit, it means absolutely nothing. There’s a reason why Samsung is the only Android manufacturer who makes money.

    3. Apple shouldn’t waste their time trying to sell in India. Indians prefer ‘cheapo’ things and also, with their rupee crashing on a daily basis, there’s not much hope of making money there.

    4. Apple is a business. With an ARPU of about $1.60, it doesn’t make any sense to be a cell phone carrier in India, much less a smartphone handset vendor. When users are paying so little for service, they are not inclined to pay a whole lot more for the handset. And that’s fine. Apple can cede the majority of this market to Android and capture the top five percent or so. Guess where 75% of the profits will be…?

      Even if the carrier booked the entire ARPU as profit, it would take nearly 10.4 years to pay off a $199 subsidy. The $549 cost of an iPhone 5c in India would take 28.6 years. This is a much different market than in the U.S. where the unsubsidized cost of a high-end smartphone like the iPhone 5s is roughly equivalent to the cost of one year of service. Monthly rates are slowly declining in the U.S. with the rise of no-contract alternatives. But our lowest rates are over a factor of 20 higher than in India. Amazing.

    5. I agree, India HAD a middle class and I am expecting to see them want iPhones. I can’t wait to see the “surprise” and “shock” when Apple sales exceed expectations. Will Apple sell well in the lower levels of society? Apple has never yet tried for that market. They leave that for Samsung to scrape out a living with.

      1. Actually the $99 and $199 high end iPhone 5 is pratically cheap if apple sells them at that price in India 🙂

        Most of the iPhone users would have not got their mobile by paying full price while almost everyone in India buys at full price. We pay full price if it worth unlike the subsidies rate!

    6. @ macman

      There are about 5 BILLION people OUTSIDE India. Why are they more important than the rest of us? Besides. Not all of those 1.2 billion are potential costumers… Lowering your margin is easy. Get it up again is hard or impossible. Making it up in volume is a fools game. That’s why those players always succeed… Making losses, struggling, going bankrupt, getting bought out..

    1. Alright Indian Consumer – Please don’t undermine the intelligence of the good Indian people to try and make a point, its just lame and super disrespectful. 95% of all humans would not agree with that bull crap statement – so we all have to wonder what your real agenda is!

    2. i’ve debated with Indian users over the last few months who keep bashing Apple as (the article pointed out) few indians want to spend money on Apple.

      Just like to point out if India thinks Apple thinks Apple is bad, fine. Apple doesn’t need India BUT:

      India not taking the BEST TECH in the WORLD would FALL FURTHER BEHIND.

      China for all it’s faults embraces Apple and has THREE TIMES the PER CAPITA INCOME of India (i.e the average chinese earns more than three times an Indian).
      You have a system which does not absorb the best tech in the world you will sink. Your businesses running Malware ridden, old OS (few androids have the newest OS) , buggy low powered android mobile devices and you won’t be able to compete with other nations . Like a Olympic runner who wants to compete but decides to buy the CHEAPEST SHOES.

      Want to be cheap luddites in todays competitive world: you die.

      1. People who can’t afford nice things often whine, complain, and throw out baseless allegations about a company being “bad” to justify the fact they can’t afford the item.

        1. It’s like people who can’t afford a BMW, Lamborghini etc bashing it, saying a Yugo because it ALSO has 4 wheels is exactly the same or better.

          I can’t afford a Lambo (but I don’t bash it as inferior)

          but I can afford an iPhone. Not spending the few hundred bucks difference to get a much better malware free device that you spend hours on everyday is silly. Comes to a few cents difference a day on two year contract. You make it up easily by the time and effort you save using a better device. ( And the higher end android phones cost as much or more than an iPhone. Yet the 5S is twice as fast as an S4… )

          1. but I can afford an iPhone.. Comes to a few cents difference a day on two year contract – so you did not full price. no you cannot afford an iphone other wise you would have got it at full price. You are cheap.

      2. The cheapest iPhone is $99. majority of android in India are selling at more then 99. So which country is cheap??
        When you buy mobile at full cost $600+ then lecture us on been cheap.

  2. Indians took the phones and disappeared. Holy crap. Apple better charge those people the full price up-front or stay the hell out of India. Let Samsung have all of India. No point in catering to deadbeats.

    1. Did you not read the article? It specifically stated that people taking the phones and not making their payments is precisely why Indian cell service providers DON’T subsidize any phone.

  3. “People took the phones and disappeared”

    I think they for another huge problem over there than subsidy… It is said to be the largest democracy in the world. It’s FAR from a democracy it seems to be allot of other things is a big mess over there… For one, get a grip on how many people live India and register them. Where do they live etc. No wonder nothing can be done over there… Communist China, they are what they are and do what they do but they have a grip on things and order. India is a big MessFest.

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