August 22, 2008, Apple’s iPhone3G finally hit Indian markets. The country’s two top GSM operators ?? Bharti Airtel and Vodafone Essar ?? launched the phone bundled with their respective services.
iPhone3G is a complete mobile platform that allows users to surf the internet and access applications such as email and corporate data. It is equipped with a global positioning system (GPS), which enables location-based services, as well as 3G, thus allowing for high speed internet access. With support for three 3G bands and both universal mobile telecommunications and high speed downlink packet access (HSDPA) networks, the iPhone can operate in a number of countries. It is priced in India at Rs 31,000 for 8 GB of memory space and Rs 36,100 for 16 GB.
Apple has made a software development kit (SDK) for the new iPhone freely available to prospective software developers so that they can create an ecosystem around this smartphone. The SDK has been a big hit with both Indian and international software developers coming up with hundreds of new applications. These players include Udipi (Karnataka)-based Robosoft; New York-based mobile application developer AirMe; and Hyderabad-, USand Hong Kong-based product company QueTech. Within a month of the launch of the iPhone, some of the over 1,000 applications are available at the Apple Store and over 100,000 users have downloaded more than a million copies of applications, about half of them free.
Market response
The expectations from the much-hyped iPhone were high, given the fact that Apple sold 3 million iPhone3Gs in the first month of launch when the product was available in 22 countries only. However, while the over 200,000 pre-bookings augured well for Bharti, the response to the iPhone has been tepid so far. According to industry reports, both Bharti and Vodafone Essar have managed to sell no more than 1,500 phones in the first week of launch. However, analysts expect that the next wave of uptake should follow a substantial price cut because most consumers are probably expecting one, going by the experience in other markets.
In countries like the US and Japan, operators dropped iPhone prices by a huge 50 per cent within a few months of launch. Globally, the iPhone now costs between $199 (around Rs 8,000) and $299 (Rs 12,000), depending on the model. In some countries, operators are offering the iPhone bundled with a connection for an initial cost of just Rs 65 and a monthly rental of around Rs 4,500. In Japan, for example, iPhones are available for a monthly fee of just Rs 1,100.
In India, operators are pulling out all stops to increase sales. Vodafone, for instance, is reportedly talking to Barclays and ICICI Bank to introduce two schemes for 6and 12-month connections. But selling the iPhone in the price-sensitive Indian market, where most mobile devices are in the Rs 10,000-17,000 bracket, will not be easy for Apple or for the two mobile operators. As a KPMG analyst says, “At Rs 31,000 for the 8 GB model, the price is steep for a first iPhone device. The iPhone tagline ?? twice as fast, half the price ?? doesn’t quite fit for the Indian market.” Further, iPhone’s high price and some technical deficiencies such as low megapixel camera, GPS facility without voice navigation, no SMS forward option, no external memory option and poor Bluetooth feature could also put a damper on sales.
There is also the problem of the phone being operator locked, which means an iPhone owner cannot change operators despite paying such a high price. Security is another area where Apple has to prove itself. In comparison, competitors Palm and BlackBerry already have well-established credentials in terms of security. It remains to be seen whether businesses are comfortable about their executives carrying sensitive data and email on the same device that they watch YouTube on and listen to MP3s. However, a Gartner analyst says, “By licensing Exchange ActiveSync and expoSing its basic security policies, enterprises can provide sufficient security for iPhone during exchange of personal information manager and email use.”
Competing products
Apple’s iPhone faces competition from a thriving grey market. With prices as low as Rs 20,000 for a 16 GB iPhone, the grey market is likely to eat into sales.
Also, despite all the hype around the iPhone and its perceived threat to the BlackBerry, the smartphone space is ablaze with new products. The biggest threat to the Apple smartphone is the Nokia N96, a dual-slide handset, which will be available to Idea Cellular’s subscribers from endSeptember 2008. The N96 comes with 16 GB of storage space, which can be expanded to 24 GB. It comes preloaded with the “Wave Secure” security application that allows consumers to not only track the phone if it is stolen or lost but also to create a back-up through the internet.
In the coming weeks, BlackBerry will unveil the new Bold. Instead of a touchscreen interface like the iPhone, it boasts a large, half-VGA colour LCD that promiSes razor-sharp pictures. The Bold will also be Wi-Fi ready and operate on HSDPA, making it zippier and more flexible for web access than its predecessors.
Also due to hit the market is the new Treo Pro from Palm. GPS mapping and one-touch Wi-Fi are just some of the features on this new business smartphone.
All in all, given the extremely pricesensitive nature of the Indian market, the huge gap between the grey market and operator prices, and the large number of similar products lined up for launch, the iPhone will need to climb down to “half the price” in order to make a real dent in the market.
