iPhone 4 sales have trebled during the last five days over the preceding week, surpassing the demand for the iPhone 5 in India, as customers rushed to avail of the recently launched buyback scheme, said four large handset and electronics retailers. Apple is offering a discount of at least Rs 7,000 on the iPhone 4 in exchange for any smartphone.
A senior official of a leading Apple premium reseller said the Cupertino-based company has decided to aggressively push the older model in India because it wants to position the two-year-old phone in the sub- Rs 20,000 segment, where brands like Samsung Galaxy, Sony Xperia, Nokia Lumia and BlackBerry are jostling for dominance.
The iPhone 4 costs Rs 26,500 in India, and the exchange scheme allows an existing smartphone user to buy the Apple model for less than Rs 20,000.
Changing tack for India “Apple follows a single pricing policy across the world and the company or its distributors have resorted to indirect discounting to improve penetration of iPhones in India. Smartphone volumes in India either come from the entry-level or the Rs 12,000-22,000 segment, which is where Apple wants to position the iPhone 4,” said the official working with a premium reseller.
The buyback scheme could be an international first for Apple as well. While globally, Apple offers gift vouchers or discounts for existing iPhone, iPad, or Mac customers to buy company products, this is perhaps the first time that the company is offering such a scheme to entice customers of competitors.
Leading multi-brand retail chains like The Mobile Store, Future Group’s eZone, Next Retail and Reliance Digital, which together have run more than 1,100 stores, said the iPhone 4 has become one of the top three selling handsets by value, along with Samsung’s Galaxy Grand and Note II. While executives in these chains refused to share specific sales data, they said iPhone 4 sales have shot up three times since the exchange offer was unveiled last week.
This is how the scheme works. The customer will get a minimum discount of Rs 7,000, but if the value of his phone in the second hand market is more, his discount will be higher. For instance, if his model is fetching Rs 8,500 in the used phone market, he will get the entire amount as a markdown on his iPhone 4 purchase.
The retailer, in turn, is getting reimbursed by Apple’s distributors through a Rs 5,000 credit note. In addition, the retailer will pocket the money earned from selling the customer’s old phone in the second-hand market.
Apple’s arch-rival Samsung has been quick to respond to the buyback scheme, triggering a potential price war in the mid-to high-end smartphone segment, The Korean company, which is the clear market leader in India’s fast-growing smartphone category, is offering markdowns of up to Rs 5,600 on mid-to-high-end Galaxy phones and tablets such as the Galaxy Tab, SIII, Grand and Note II that are purchased through credit cards. As per estimates, around 80% of the Rs 15,000-plus handsets and tablets are bought on credit or debit cards.
Himanshu Chakrawarti, CEO of the Essar Group-owned The Mobile Store, India’s largest cellphone retailer, says Apple has never chased volume market share as aggressively in India as it is doing now. “And with Samsung almost simultaneously launching its scheme, it will further energise the market,” he said.
Veteran handset industry expert and ex-CEO of BlackBerry India Sunil Dutt says the Apple-Samsung war in India might lead to price cuts by other brands as well. “The Indian mobile phone market has never witnessed anything like this. Apple wants to grow fast in India while Samsung wants to protect its turf and keep ahead of Apple,” he says.
As per a recent report by Canalys, a research firm, Apple shipped 2.5 lakh iPhones to India between October and December, a three-fold growth over the previous quarter. While last quarter’s (January-March 2013) shipment data is yet to be released, market trackers like IDC are confident that Apple’s shipment numbers to India will grow significantly. But it still lags substantially behind Samsung.
“Aggressive consumer promotional schemes are led directly by Apple, which wants to improve its sell-through and volume market share in India,” said IDC India senior market analyst Manasi Yadav. Experts attribute Apple’s new-found aggression in the last six months – which includes appointment of retail distributors, high-voltage advertisement campaigns, 0% EMI schemes, followed by the latest buyback scheme – to slowing demand in the US and Europe, as well as rising awareness in the Cupertino-based company about India’s huge demand potential.
All this is of course good news for the Indian consumer, who can now theoretically trade his entry-level handset at a higher value than the original purchase price of his phone. For instance, he can get a Rs 7,000 discount on the iPhone 4 by surrendering his old Samsung Galaxy Y, which is currently priced at around Rs 5,800. The offer includes Indian brands like Micromax, Lava and Karbonn as well.
A premium reseller executive said Apple would continue to make profits on iPhone 4 handsets in India, despite the buyback scheme, because of high margins. Another leading Apple dealer said the company was offering the discounted price because the demand for the iPhone 4 had waned in the US and Europe as a new model was expected in the near future.
MY OPINION : –
The deal with Apple for iPhone 4 is just incredible, and with Samsung joining in, it creates a lot more excitement. And other mobile companies might join in this fight.
We might even see price cuts on many smartphones.