Menu
Refurbished and old models of iPhones only way for Apple to crack Indian market

Refurbished and old models of iPhones only way for Apple to crack Indian market

The Indian market is very price-sensitive and import taxes are high

Apple’s strategy to sell refurbished and older models of its iPhone in the Indian market may be the only way the company can sell its phones in volumes in the country.

Indian users are very price-sensitive and the market for the high-end phones sold by Apple cannot be large, said Kiranjeet Kaur, research manager at IDC Asia-Pacific.

The Chinese experience cannot be replicated in India because per capita incomes are not very high in the country, Kaur said. Import taxes on smartphones are also high and the U.S. dollar has been strengthening against the Indian rupee.

Apple has invested in distribution channels in more cities in the country, and started selling old models of its phones. Still, it sold less than 1 million phones for a 3 percent share of the Indian smartphone market in the fourth quarter, Kaur said.

Most of the growth for Apple has come from sales of its older models like the iPhone 4s, said Vishal Tripathi, research director at Gartner. Apple may now be targeting the low end of the smartphone market with refurbished phones, he added.

The new 4-inch Apple iPhone SE, which will cost 39,000 rupees (US$589) for a 16GB version, is unlikely to attract price conscious users, Tripathi said.

Over 25 million smartphones were shipped in India in the fourth quarter, up 15.4 percent from 22 million units for the same period last year, according to IDC data released in February. Samsung Electronics led the market with a 27 percent share, followed by Indian player Micromax with a 14.1 percent share.

But with growth in China beginning to slow down, competition for Apple and other key players is only likely to increase as Chinese players like Xiaomi look to India as the next opportunity.

Apple has applied to the Indian government a second time for permission to ship refurbished phones in India. Its first application was rejected by the Ministry of Environment because of concerns about an e-waste problem the scheme could create because the phones would be close to end of life, according to a government official who declined to be quoted.

The company’s refurbished phones are not like any other second-hand phones that are traded in India, but Apple certified pre-owned phones that will have new serial and IMEI numbers, and will ship from Apple’s suppliers, according to a source familiar with the situation. Apple did not comment.

Some of the refurbished phones may come from Apple’s recently launched trade-in program for older phones, Kaur said. Under its Trade Up with Installments program, Apple has recently started offering customers in the U.S. discounts on newer models if customers trade in older versions of their devices, including the iPhone 6.

The potential diversion of these phones to India has raised concerns that Apple is trying to make money from “dumping” old phones from the trade-in program in India, a point the competition has seized on to lobby the government to refuse permission for Apple's plan to offer refurbished phones.

Apple may also fall foul of the government’s bid to boost local manufacture, said a source in government on condition of anonymity. It may, however, try to placate the authorities by offering to do the refurbishing locally.

Some other smartphone companies have been quicker to manufacture locally. Almost one in two smartphones shipped in the fourth quarter of 2015 were locally manufactured, which is expected to increase further as more vendors try to benefit from subsidies and be more price competitive, IDC said.

The Apple certified refurbished phones stand a good chance as they will be seen as being of good quality, Kaur said. But Apple will have to sell the products at a discount of between 10 to 20 percent from the market price for new products to make an impact, she added.

Apple could make a strong impact on the low-end of the market if it sells refurbished versions of older models like the iPhone 4s at below 10,000 rupees, Tripathi said. People will be willing to buy a refurbished iPhone at that price because of the strong brand image that Apple has in the country. “This is one of the reasons the competition is worried about Apple’s plans,” he added.

By getting people to buy Apple phones, the company could also be aiming to get people hooked to the iPhone experience, and hope that people will pay more at a later date for a new phone, Tripathi said.


Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Featured

Slideshows

Sizing up the NZ security spectrum - Where's the channel sweet spot?

Sizing up the NZ security spectrum - Where's the channel sweet spot?

From new extortion schemes, outside threats and rising cyber attacks, the art of securing the enterprise has seldom been so complex or challenging. With distance no longer a viable defence, Kiwi businesses are fighting to stay ahead of the security curve. In total, 28 per cent of local businesses faced a cyber attack last year, with the number in New Zealand set to rise in 2017. Yet amidst the sensationalism, media headlines and ongoing high profile breaches, confusion floods the channel, as partners seek strategic methods to combat rising sophistication from attackers. In sizing up the security spectrum, this Reseller News roundtable - in association with F5 Networks, Kaspersky Lab, Tech Data, Sophos and SonicWall - assessed where the channel sweet spot is within the New Zealand channel. Photos by Maria Stefina.

Sizing up the NZ security spectrum - Where's the channel sweet spot?
Kiwi channel comes together for another round of After Hours

Kiwi channel comes together for another round of After Hours

The channel came together for another round of After Hours, with a bumper crowd of distributors, vendors and partners descending on The Jefferson in Auckland. Photos by Maria Stefina.​

Kiwi channel comes together for another round of After Hours
Consegna comes to town with AWS cloud offerings launch in Auckland

Consegna comes to town with AWS cloud offerings launch in Auckland

Emerging start-up Consegna has officially launched its cloud offerings in the New Zealand market, through a kick-off event held at Seafarers Building in Auckland.​ Founded in June 2016, the Auckland-based business is backed by AWS and supported by a global team of cloud specialists, leveraging global managed services partnerships with Rackspace locally.

Consegna comes to town with AWS cloud offerings launch in Auckland
Show Comments