On September 12, Apple unveiled the iPhone 15, the first-ever model that the tech titan is assembling in India. Now that the iPhone is being assembled locally, customers were hoping the advantage of lower prices would be passed on to them, but Apple has delivered a negative surprise. Instead of making the new iPhones more affordable, the company will discount the previous models aggressively.
The Cupertino-based company is charging Rs 79,900 for its most basic iPhone 15, with prices rising to as high as Rs 1,99,900 for the 1 terabyte (TB) version of the iPhone 15 Pro Max. While the price of the basic model is largely unchanged from last year, when the company launched the iPhone 14, it has increased it for the Pro models, contrary to the price-drop expectations that most people had.
“It is naive for us to assume that assembled in India would mean cheaper iPhones. Even though Apple would be saving money by assembling the non-Pro models here in India, Apple is not known for decreasing the price of its new launch models,” Navkendar Singh, Associate Vice President with IDC India, said.
“It will instead invest in marketing, supply chain, and the like, and more importantly, run aggressive affordability offers for previous generation iPhone models, which anyway give majority volumes to Apple in India at any point,” he added.
That approach is fair given that about two-thirds of Apple’s business in India comes from the sale of older models, said Singh. Apple’s market share in India continues to increase. It has grown from around 1 percent in 2019 to around 5 percent in 2023, and continues to make headway, analysts said.
Apple has already shipped over 4.5 million devices in the first seven months of 2023 and is on track to reach 8.7-9 million unit shipments by the end of 2023, Tarun Pathak, Research Director at Counterpoint Research, said. That would mark a jump from the 6.7 million units that Apple shipped to India in 2022.
Second-hand appeal
The bulk of the company’s sales come from previous models, which is understandable, since it reduces the prices of the older ones each time it launches a new iPhone, making its phones more affordable in India, which ships around 145-150 million smartphones each year.
In fact, just as the iPhone 15 was launched on September 12, a TechArc survey of 1,200 users revealed that around 63 percent of the respondents would now opt to buy the previous models of the iPhone. TechArc is an independent research organisation.
The inclination to buy previous models is largely because of the price advantage, which is especially crucial in a price-sensitive market such as India. Singh of IDC said that 80 percent of the smartphones sold in India have an average selling price (ASP) of less than $300, or about Rs 25,000. Apple’s iPhones, on the other hand, have an ASP of over $940 (around Rs 78,000) excluding Goods and Service Tax (GST), he added.
Hence, reducing the price of the iPhone 15 would have likely resulted in higher sales, analysts said. “However little the price difference, Apple should have passed it on to the customers to make the iPhone 15 cheaper in India. Nothing explains why the company did not do it,” Pathak of Counterpoint said.
Naturally, as people switch to another iPhone model, they sell their older phones. Mandeep Manocha, CEO and co-founder of Amazon-backed Cashify, a used phone dealer, said his company typically buys 3-4X more iPhones versus business as usual (BAU) around September each time Apple launches a new iPhone model. Manocha did not reveal specific numbers.
India is a large market for refurbished phones, with companies like Xiaomi (Mi) and Apple occupying the top spots, he added.
However, sales numbers are lower thanks to the festive offers on new phones by Flipkart and Amazon.
“October is generally a low period for us since e-commerce companies come up with very aggressive offers on new phones,” Manocha said when asked how customers buy refurbished iPhones from Cashify.
In the past, both Flipkart and Amazon have partnered with banks like State Bank of India (SBI) and HDFC, among others, to offer discounts on new iPhone purchases. Analysts predict companies will run similar offers this year too.
Pre-bookings for the iPhone 15 begin on September 15, and the devices will be available from September 22, Apple’s official website said. It is also important to note that this is the first time the company will launch its phones simultaneously in the United States and India, but the move is unlikely to dent the demand for iPhones in the grey market.
Grey market demand strong
Even as e-commerce websites offer discounts on the products, customers will not stop purchasing iPhones from the grey markets in India, analysts said. Delhi’s Gaffar Market and Mumbai’s Heera Panna are popular grey markets for iPhones in India, which sell brand new iPhones at a discount of around Rs 20,000, depending on the model.
A grey market is where unauthorised dealers sell the latest iPhone models at a discount but mostly do not give a warranty on the product. These sellers source iPhones from the US, Dubai, and other regions in the Middle East where these are much cheaper, leaving enough profit margin for the resellers.
While the iPhone 15 Pro and iPhone 15 Pro Max models are cheaper by about Rs 15,000-Rs 20,000 in markets like Dubai, the non-Pro models are cheaper by about Rs 5,000 or are largely the same.
Make more in India?
Pathak of Counterpoint Research offered three reasons to explain the price difference in iPhone Pro models.
First, the Pro models are not yet being assembled in India. At present, Apple assembles only the non-Pro models in India. Next, manufacturing in India is slightly more expensive than in China because of foreign exchange headwinds.
“Also, remember, iPhones are only assembled in India. While some parts, like the cables, are made in the country, other bits like kits and modules are still imported, because of which Apple has to pay duties and taxes which drive up prices,” Pathak added.
That is likely to change in the coming years. Apple may shift more than 18 percent of its iPhone production to India by FY25, up from 7 percent in FY23, thanks to the production-linked incentive (PLI) targets set by the Indian government, Bank of America analysts said in a recent research report.