Apple Slashes iPhone Prices in Effort to Dominate India

Apple Slashes iPhone Prices in Effort to Dominate India Credit: WSJ
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Apple is allowing local Indian retailers to dramatically slash prices on older iPhones in an effort to help the company gain traction in the burgeoning market, which will become the world’s second largest behind China.

These price cuts see devices as old as the iPhone 5 selling for around $200. In addition, retailers are also offering a variety of cash-back offers, exchanges and payment plans to entice young Indians to buy Apple products. The company has also taken to hiring “affordability managers” to negotiate loans on behalf of potential buyers. These older iPhones, including aging devices like the iPhone 5s and iPhone 5, make up about 55 percent of Apple’s shipments to India, according to market research cited by Bloomberg.

During Apple’s May earnings call, Apple CEO Tim Cook said that the company was “very optimistic about (their) future in this remarkable country.” Cook went on to cite India’s “very large, young, and tech-savvy population, fast-growing economy, and improving 4G network infrastructure” as reasons for Apple’s increased efforts to push into the Indian market.

In February, the Times of India reported that Apple will begin manufacturing iPhone SE devices this year at a facility in Bengaluru, India (also known as Bangalore). Currently, there’s no information on how many iPhone SEs will be built at the plant, though Bloomberg reported that the Wistron-owned facility is currently building a “couple thousand” in a trial run. In order to meet Indian government regulations, Apple’s next logical step would be to manufacture individual components in India — earlier this year, Apple announced its plan to create a “manufacturing ecosystem” in Bengaluru. Notably, it’s currently unknown what price point the locally produced iPhone SE devices will sell for, but local officials hope it’ll be around $100 less than the current price. Even then, the iPhone SE will likely rank as a premium handset, as the average price for smartphones in India hovers around $150, according to market research firm IDC.

India will likely turn out to be a key market for Apple. Last year, Cupertino controlled less than 5 percent of the booming market in the country. Additionally, manufacturing iPhone devices locally would allow Apple to begin building retail stores within India — which is restricted unless companies purchase at least 30 percent of materials from Indian manufacturers and vendors. It’s good timing, too: India is reported to overtake the U.S. this year as the second largest overall smartphone market behind China.

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