Apple iPhone 3G strikes wrong chord in India, fails to take off

Apple had launched the iPhone way back in August amid much fanfare through mobile operators Bharti Airtel and Vodafone Essar with people queuing up in front of the retail outlets since midnight in their bid to be one of the first buyers of the touchscreen smartphone. However, within weeks, the message was clear: iPhone has no takers.

According to industry estimates, both the telecom majors have failed to sell less than 1500 iPhones during the first week of launch and one of the impediments is its high cost price - the 8GB version costs Rs.31,000 while the 16GB one costs Rs.36,100. Other factors include low-key advertising, marketing and distribution campaign.

"Unlike in the US where the iPhone costs $299 or less, in India it costs 3-4 times more," said Anand Bhargava, analyst (telecom), Technocom Solutions.

"In the US and Europe, as the iPhones come bundled with subscription plans, the mobile operators can push down the prices," Bhargava said. "In India too, Airtel and Vodafone are selling the iPhone with lock-in clauses that discourage the customer from migrating to other plans or operators. However, the prices are still too high."

Realizing the looming danger of losing customers, Airtel and Vodafone were quick to offer easy financing scheme for credit card holders of various banks and threw in freebies like year-long free SMSes and data download, but it was too little too late. The damage had been done. Apple could not sell even 12,000 iPhones by the end of October.

However, analysts have an explanation. According to them, Apple itself did not expect iPhone to do very well in India despite 10 million phones being sold every month of which 500,000 are of the smartphone range like iPhone. Apple, they said, had expected to sell about 50,000 iPhones in India for the current fiscal year and had its own internal goals of moving 100,000 units by December 2009.

The lukewarm response, analysts said, was not just its high price but actually due to the fact that neither Apple nor its carrier partners carried out any aggressive marketing campaign in India to reach out to the people.

According to the analysts, touchscreen smartphones of other brands, including Nokia N96, Samsung Omnia and BlackBerry Bold cost more than the iPhone, but, looks aside, these phones offer more and better features, making them a huge draw among Indians.

"Though these phones are costlier, yet, they have far better and more features than the iPhone. On the other hand, while some of the iPhone features do not appeal to Indian customers, others, like 3G capabilities, is rendered useless as India does not yet have 3G networks," Bhargava said.

"The biggest mistake is that neither Apple nor its partners could position iPhone as a lifestyle product. The phone, which costs as much as a monthly take-home salary of an Indian IT engineer, failed to take off because not only its price was way too high (vis-a-vis the features it was offering), but also it find to capture the niche market in India," he said.

Agrees Priyanshu Dutta, tech analyst at Swarna Investment Fund.

"Apple failed to create a product awareness. It failed to study the Indian market carefully. If it had, it would have realized that advertisement, marketing and distribution in India are convoluted processes involving several different retailers that employ multiple strategies to reach the many different types of customers that are found in India. The whole marketing campaign was a low key affair from the start if we compare it to Apple's promotional campaigns in the West," Dutta said. "While Apple ran a month-long ad blitz, its carrier partners Airtel and Vodafone showed a laid back approach, largely limiting their marketing efforts to their own subscribers who already has a mobile phone."

"This is the first time a top-notch iconic brand has failed in India," he added. "Instead of going all out in terms of advertising and marketing, Apple decided to restrict itself to selling iPhones only through its partners, through their exclusive outlets. But both Apple and its partners lack the experience of advertising, marketing and distribution in the vast complex Indian retail environment. Besides, this has antagonized big retail chains that dominate the market in India as well."