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Will Apple’s new pricing strategy for iPhone 11 work for India?

Shruti Dhapola
In India all eyes will be the iPhone 11, which has the most affordable pricing among the lot. (Image source: Bloomberg)

Apple announced its new iPhone 11 series last night at the Steve Jobs Theater in the Apple Park Campus, in Cupertino, California. As expected there are three new iPhones: the iPhone 11, the iPhone 11 Pro and iPhone 11 Pro Max. The iPhone 11 is the successor to the iPhone XR, which was the ‘affordable’ iPhone in last year’s lineup. While the specifications and features were in line with what the leaks predicted, Apple sprang a surprise on one front: the price of the iPhone 11.

In the US, the iPhone 11 starts at $699, compared to the $749 for the iPhone XR. This is $50 lower than last year’s starting price. More importantly, in India the starting price of the iPhone 11 will be Rs 64,900 compared to the Rs 76,900 launch price of iPhone XR last year.

Apple appears to have got it right with its pricing in the US. Creative Stratergies, Inc president Tim Bajarin Told indianexpress.com that the new iPhone 11 at $699 is aggressive pricing and it will be Apple s biggest seller in the new year.

Read more: Apple iPhone 11 Pro: What does the Pro in iPhone mean for you?

But the iPhone 11’s pricing in India still doesn’t make it an ‘affordable’ option. Of course, ‘affordable’ is a relative term when it comes to Apple. Last year’s iPhone XR at Rs 76,900 was unappealing given the high price. A few months down the line, there was a price correction and the iPhone XR was retailing at close to Rs 50,000 thanks to e-commerce websites. The lower iPhone XR price resulted in sales picking up.

Apple will continue to sell iPhone XR at Rs 49,900 in India. (Image source: Reuters)

The end result was that in the second quarter of 2019, Apple s iPhone XR contributed to more than 55 per cent of the company’s total shipments in the second quarter of 2019, according to numbers shared by research firm International Data Corporation (IDC).

But will iPhone 11 eventually prove to be a success in India? It might not be so simple. According to Navkendar Singh Research Director Devices and Ecosystem: India & South Asia at IDC, the price tag of Rs 65,000 remains very high for a market like India.

Read more: Apple iPhone 11 series is here, so is aggressive pricing on Apple services

"Apple saw some success and volumes in the second quarter in India, due to price correction of XR at Rs 54,000. While there will certainly be consumers looking to upgrade from 6 and 7, with XR being continued, we should see further price reduction and volumes coming from XR than the iPhone 11," he said to indianexpress.com.

The iPhone 11 comes in a number of colours, including a new green and a purple variant. (Image source: Nandagopal Rajan )

Singh also pointed out that there are a whole lot of iPhone users currently now on iPhone 6, 7 and 8 series, and will be looking for upgrade considering the two years plus replacement cycle in the premium segment. And many of them would upgrade, irrespective of the price or specifications or number of cameras. To that extent, it (iPhone 11) would get volumes for Apple," he said.

But according to Tarun Pathak, Associate Director at Counterpoint Research, the price is a sign that Apple is realising the importance of India market.

"Yes, $50 for other markets might not move a needle for Apple but iPhone 11 pricing in India is a sign that Apple realizes the growth potential market like India. India premium market is growing faster (+20%) than the overall market (+10%) and is likely to stay the same for coming years. In fact people are upgrading in India faster than some of other markets. This presents an opportunity for Apple," he said in an email query to indianexpress.com.

He too pointed out to the recent surge in sales of iPhone XR in Q2 after the price cut. "We believe that sales will be more in favour of iPhone 11 than pro series in India," he wrote.

The iPhone XR could still undercut the iPhone 11’s sales given it could see a further price reduction. The iPhone XR’s price is now listed at Rs 49,900 on the Apple India website and with online discounts, it could be even more affordable.

For the iPhone 11 Pro series though, Singh said it was hard to see an Android premium user jumping to iPhone merely because of the cameras, since most Android flagships are already giving that and much more at much lower price." In his view, the iPhone 11 Pro won’t get significant incremental volumes in India.

Regarding the bundling of free services like Apple TV+, Singh said it was very aggressive pricing. "This is as reasonable as Apple could charge. This aggressive pricing and free bundle for 1 year with Apple devices is another aggressive play into its refocus on services than just hardware, in the long term," he said.

According to Pathak, the bundling of services is likely to help in the long run than any short term opportunity as iPhone installed base is still less than 3% in India. "However, the aggressive pricing will drive the faster adoption for existing iPhone users," he noted.

In India, Apple is offering its TV+ services for just Rs 99, though it is free for all iPhone, MacBook and iPad buyers the first year. This makes Apple TV+ cheaper than Netflix and Amazon Prime Video’s monthly cost of Rs 129.