iPhooon; too cool, too soon!

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iPhone entered the Indian market with its 3G iPhone... But what use is 3G in India? Is the party over already? Or is there more in store...?

The revolutionary iPhone finally landed on the Indian runway... However, what it received here, was just (literally) an empty bus of disheartened and disgusted enthusiasts... Yes, the technological ‘Swiss knife’ was launched across 6 cities in India, but the August 22, 2008 party was spoilt by its ‘hefty price’; and the ‘best buy’ terms, just seemed too ‘hollow’!

Anybody interested in the iPhone would be aware that globally, the 8GB & 16GB versions are available for just $199 & $299 respectively. The typical ‘I wanna buy the iPhone’ Indian therefore anticipated a price range of Rs.10,000 to Rs.15,000! But lo and behold! Apple decided to tweak pricing rules for India and launched the product for a hefty Rs.31,000 & Rs.36,100 for the 8GB & 16 GB models respectively (to be distributed through Airtel and Vodafone)! In a price-sensitive market, this pricing strategy was illogical, right?

For a change, look at it in the light of Apple adopting a skimming strategy, where it enters the market with a high price-tag and then lowers it in intervals, garnering higher revenues with each price fall. Also, the iPhone’s image is nothing but ‘coveted’ in the domestic circuits, hence a high-price point during entry would ensure that it maintains the ‘niche’ image. However, much as its high price is justified, the Rs.30,000+ range still means stretching it a bit too far.

So how will this Indian party be different? Globally, the gadget tasted great success as a staggering 1 million units of the 3G version were sold just 3 days post-launch in 21 countries. However, the figures stood at just a poor few thousands in India during the same time-period. “Buying at Rs.31,000 doesn’t seem to be an intelligent idea, especially when even the 3G technology is unavailable in the country. I will wait for the price to come down,’ asserts Rajan Malik, who was one of those disappointed. Sources confirm that the highest number of handsets sold by Airtel was in Delhi, whereas Mumbai proved luckier for Vodafone on the first day of its launch. Airtel sold around 200 handsets in Delhi and Vodafone around 250 in Mumbai on the first day itself. But these numbers aren’t by any means symbolic of a box-office hit! However, Apple has shown that it is willing to allow a lowering of price to boost demand, a glimpse of which was first seen with Vodafone slashing the price by Rs.1,500 already. A telecom analyst also opined on conditions of anonymity that, “Huge price-cuts can be expected in the coming 3 months as I don’t see iPhone capturing a really huge market share in India at the current pricing levels.”

Moreover, with the iPhone 2G already available in the Indian grey market for around Rs.20,000, the 3G enabled new iPhone’s 3G feature is rendered worthless in India. Vodafone and Airtel are also trying to save the day for Apple as they’re offering a free downloading pack along with the iPhone for the initial time-period. But don’t be surprised if the download happens at a dead pace as the user will be on a 2G network! Further on, absence of user-friendly blue-tooth, absence of zoom & flash feature et al, makes iPhone far less than the gadget that India most desires at a Rs.30,000+ range. And talking about the party, Steve Jobs (Apple’s CEO) was nowhere to be seen in India! Maybe he’s just avoiding those angry stares (he knew about it, didn’t he?). And as for Sanjay Gupta, CMO, Bharti Airtel Ltd. (who owns a Blackberry), he’s willing to wait for his first iPhone. “I will switch over to iPhone once all my customers are serviced...” Hopefully, Sanjay will get his iPhone soon.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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