Apple iPhone price may fall 15%

A week after Apple began selling iPhone in India, experts believe that the iconic phone is ready to become cheaper by more than 15 per cent to boost sales in the world’s fastest-growing mobile phone market.

Globally the 3G iPhone has sold over a million units, but the sales in India are believed to have crossed just 5,000 pieces. The picture remains unclear since Vodafone and Airtel have fallen silent after the high-decibel launch. Apple may drop iPhone’s price by at least Rs 5,000, says Anshul Gupta, principal analyst with Gartner. “At current prices, we expect iPhone to sell primarily among those who cannot wait for Apple or the operators to cut prices,” he said. “It will be a volumes game then for the operators to clear out their stocks before Apple announces a new version of iPhone.”

The 3G, or third generation, iPhone sells for more than triple its US price tag in India. The eight-gigabyte model of the phone, which includes a built-in iPod and a desktop-class web browser, sells for Rs 31,000, while the 16GB version goes for Rs 36,100. Amid the confetti and cheerleaders at its launch on August 22, the price was perceived to be a discordant note.

There are an estimated 30,000 users of iPhone (first generation devices) in India, and the operators are hoping to get past this number with iPhone 3G. However, the price tag has limited Apple to an extremely small portion of the 260 million mobile subscribers in India. Airtel and Vodafone can between them theoretically carry iPhone to almost 105.2 million subscribers. However, iPhone falls in the smart phone category, whose market is estimated at 10 million by 2010.

Meanwhile, the grey market (for both the first generation and 3G iPhone), has turned bleak. “Earlier in July, I had delivered 15 iPhone 2G handsets (priced at Rs 22,000) to my customers from all over Maharashtra and in August I had bookings for almost 20 iPhone 3G of which 10 customers have already cancelled their bookings,” said a dealer in Mumbai’s Heera Panna market. The customers, he says, are looking to buy from Airtel and Vodafone since the grey market price is only slightly lower.

Analysts feel that both the operators are hoping to strike a stronger relation with their customers, by offering exclusive data plans. The industry’s average revenue per user (ARPU) has been on a decline each quarter. “As service providers penetrate deeper into the country, getting new customers who don’t spend more than $8-10 a month on their phone bills, they will rely on devices like iPhone to cushion their ARPUs in the urban areas,” says Girish Trivedi, deputy director (ICT Practice), Frost & Sullivan.