KOLKATA: iPhone4 sales have trebled during the last five days over the preceding week, surpassing the demand for the iPhone5 in India, as customers rushed to avail of the recently launched buyback scheme, said four large handset and electronics retailers. Apple is offering a discount of at least Rs 7,000 on the iPhone4 in exchange for any smartphone.
A senior official of a leading Apple premium reseller said the Cupertino-based company has decided to aggressively push the older model in India because it wants to position the two-year-old phone in the sub- Rs 20,000 segment, where brands like Samsung Galaxy, Sony Xperia, Nokia Lumia and BlackBerry are jostling for dominance.
The iPhone4 costs Rs 26,500 in India, and the exchange scheme allows an existing smartphone user to buy the Apple model for less than Rs 20,000.
Changing Tack for India
"Apple follows a single pricing policy across the world and the company or its distributors have resorted to indirect discounting to improve penetration of iPhones in India. Smartphone volumes in India either come from the entry-level or the Rs 12,000-22,000 segment, which is where Apple wants to position the iPhone4," said the official working with a premium reseller.
The buyback scheme could be an international first for Apple as well. While globally, Apple offers gift vouchers or discounts for existing iPhone, iPad, or Mac customers to buy company products, this is perhaps the first time that the company is offering such a scheme to entice customers of competitors.
Leading multi-brand retail chains like The Mobile Store, Future Group's eZone, Next Retail and Reliance Digital, which together have run more than 1,100 stores, said the iPhone4 has become one of the top three selling handsets by value, along with Samsung's Galaxy Grand and Note II. While executives in these chains refused to share specific sales data, they said iPhone4 sales have shot up three times since the exchange offer was unveiled last week.
This is how the scheme works. The customer will get a minimum discount of Rs 7,000, but if the value of his phone in the second hand market is more, his discount will be higher. For instance, if his model is fetching Rs 8,500 in the used phone market, he will get the entire amount as a markdown on his iPhone4 purchase.
The retailer, in turn, is getting reimbursed by Apple's distributors through a Rs 5,000 credit note. In addition, the retailer will pocket the money earned from selling the customer's old phone in the second-hand market.
Apple's arch-rival Samsung has been quick to respond to the buyback scheme, triggering a potential price war in the mid-to high-end smartphone segment, The Korean company, which is the clear market leader in India's fast-growing smartphone category, is offering markdowns of up to Rs 5,600 on mid-to-high-end Galaxy phones and tablets such as the Galaxy Tab, SIII, Grand and Note II that are purchased through credit cards. As per estimates, around 80% of the Rs 15,000-plus handsets and tablets are bought on credit or debit cards.
Himanshu Chakrawarti, CEO of the Essar Group-owned The Mobile Store, India's largest cellphone retailer, says Apple has never chased volume market share as aggressively in India as it is doing now. "And with Samsung almost simultaneously launching its scheme, it will further energise the market," he said.
Veteran handset industry expert and ex-CEO of BlackBerry India Sunil Dutt says the Apple-Samsung war in India might lead to price cuts by other brands as well. "The Indian mobile phone market has never witnessed anything like this. Apple wants to grow fast in India while Samsung wants to protect its turf and keep ahead of Apple," he says.
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