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issue: November 2008 APPLIANCE Magazine

India Report
Asia-Pacific Is In Touch

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Adite Chatterjee, India correspondent

Even as Internet and mobile telephony boom, Apple may be mismarketing the iPhone in India.

According to a report by the International Telecommunications Union (ITU), this region has a subscriber base of 1.4 billion and has emerged as the largest cellular phone market in the world. It also accounts for nearly 42% of the world’s Internet user population. In comparison, Europe/CIS countries account for 28% of Internet users, the Americas 20%, and the Arab states and Africa 5% each.

The two leaders in cellular telephony are China, with 600 million subscribers, and India, with 280 million. The average annual growth rate has been nearly 30% over the last five years in these two countries. The ITU report says: “Almost two out of five inhabitants in the [Asia-Pacific] region enjoy the benefits of mobile telephony today. Nonvoice applications via mobile phones are increasing rapidly and now account for more than one quarter of the region’s main operators’ mobile revenues. Text messaging (or SMS) is the predominant nonvoice, mobile application. Filipinos send a staggering 650 text messages per subscriber per month, the highest in the world. SMS has emerged as a significant alternative to computer-based e-mail in the region’s low and lower-middle income economies.... Cash transfers and online purchases are creating new business opportunities in poor countries.”

In terms of broadband connectivity, the report suggests that faster fixed broadband access is near ubiquitous in the higher-income economies of the region. For instance, South Korea is the world leader in the number of households with fixed broadband access. Not surprisingly, South Korea, Hong Kong, and Japan are also leaders in terms of 3G (third-generation) cellular deployment.

Mobile broadband, however, has yet to find a market in economies such as India and China. The report says: “The regional broadband divide is striking, with poor economies having a close-to-zero broadband penetration, compared with that of rich economies where one in four persons is a broadband subscriber.”

By the end of 2007, 97% of the region’s more than 120 million mobile broadband subscribers were in high-income economies.

In this context, the launch of the 3G iPhone by Apple in India is indeed a strange experiment. The much-hyped launch failed to enthuse consumers in India, and it is reported that in the first week only 1500 people bought the device. 3G services are yet to be launched in India, though Vodafone and Airtel, service providers for iPhone in India, have announced that 3G services will be launched early next year. The other reason for the poor sales performance is the price of the iPhone. At Rs 31,000 (approx. US$670), there seems to be few takers for the product. The price tag is obviously a huge deterrent, particularly since the iPhone is available globally at prices ranging from $199 to $299 (Rs 8000 to 12,000). In some countries, the iPhone comes bundled with a connection for the price of just €1 and a monthly rental of around €70. In Japan, iPhones are available for a monthly rental of just Rs 1100.

Clearly, the marketers of iPhone have missed out on a significant opportunity through bad timing and an impractical pricing plan. Can iPhone rework its India strategy?


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