Apple’s iPhone SE may be dead on arrival in Asia’s top emerging smartphone market, India. The launch of the lower-priced, smaller iPhone is Apple Inc’s bid to offer consumers a cheaper entry point to its signature device without sacrificing technological upgrades. It’s clearly a play for new Apple users or those still clinging to their iPhone 4s.
India, the world’s third-largest smartphone market after the U.S, is Apple’s great untapped market. According to an IDC report in March, Apple narrowly beat Xiaomi in India’s top 30 cities with slightly under 5 percent of the market in the fourth quarter of 2015.
During Apple’s first-quarter earnings call in January, Chief Executive Tim Cook signalled an intention to push deeper into India, pointing out the country’s young demographic as ripe for a consumer brand like Apple. According to Cook, total iPhone sales increased 76 percent in India while revenue was up 38 percent.
“Almost half the people in India are below 25. And so I see the demographics there also being incredibly great for a consumer brand and for people that really want the best products,” Cook said on the call.
But Apple, which already rules the roost in the premium segment, may find Indians less willing to open their wallets for the iPhone SE as they have other models in the past. Here are some reasons why:
Large Screens Driving Growth
India’s smartphone growth is currently driven by phones with large screens and low prices. Nearly 50 percent of all smartphones sold in India today have 5-inch plus displays, as more Indian consumers use their smartphones to consume media. With a 4-inch display, it is hard to see how Apple’s iPhone SE will compete amongst the pantheon of offerings available from competitors Samsung, Micromax or Lava.
Mispriced For The Market
The iPhone SE will be priced at $399 in the United States, but in India, the phone will sell for close to $590 dollars. This 48 percent price differential will be a deterrent for Indian users looking to upgrade their iPhone 6. For new Apple users, this price point is more expensive than the entry-level iPhone 6 that retails for around $463. Indian consumers are more likely to gravitate toward the iPhone 6 given the shifting preference for large screens and the gulf in pricing.
Competition in the 4-inch Display Space
According to price comparison website, Pricebaba, all of Apple’s main competitors, Lava, Samsung, Micromax and Lenovo, sell their phones with 4-inch displays or slightly over 4-inch displays at price points under 10,000 Rupees ($150) - an economical segment of the market. Peddling the premium-priced iPhone SE, which is of course a more technologically advanced phone, in this market segment will be a tough sell.
