Will the Indian operators offer subsidy to consumers when they launch Apple’s iPhone? That is the big question on everyone’s mind. How much will it cost to get an iPhone in India? As soon as Airtel and Vodafone started reaching out to customers for the iPhone, business users as well as those who may be termed as gizmo freaks went on a guessing game.
There is some belief that iPhone cost in India can be worked out on the lines of how much it costs in the US, then it will most probably be available in the Rs 8,000 range—in the US, iPhone costs $199. That calculation could be incorrect because in the US, iPhones are being bundled by service providers, who are heavily subsidizing. It is unlikely that Airtel would subsidize considering the fact that Indian operators are unlikely to make much money from such low call rates. Vodafone, considering its financial muscle, might be at an advantage as far as offering subsidies are concerned.
Channel partners who only sell handsets should specially be watchful as they are likely to be affected by iPhone pricing for the high-end segment. If Indian operators are also able to offer iPhone, which is a solid 8GB memory handset, channel partners could be adversely hit. The equivalent smartphone from Nokia, 8GB N95, sells for more that Rs 25,000, and its new N96 is expected to be available for no less than Rs 36,000. But if none of the Indian operators subsidize the iPhone, then it is likely to cost in the Rs 20,000 range. Even that is quite competitive, and competitors could be in for a challenge.
According to industry pundits, the actual cost of production of a iPhone is less than $175, so clearly the margins are big. Therefore, if Apple decides that it needs to aggressively attack rapidly growing markets like India, then its could actually offer the product for less than Rs 10,000. This may sound far-fetched, but handset companies could do anything for marketshare.