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Apple in deep India push with streaming service, iPhone 11 at 'aggresive' prices

Market watchers feel that the move could help push sales of its devices including iPhones, thereby propping up revenue and profitability.

Sep 11, 2019, 11.48 PM IST
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NEW DELHI/KOLKATA: Apple made a determined bid to push deeper into India, unveiling what analysts termed was a disruptive pricing for its upcoming video streaming services to take on the likes of Netflix, Hotstar and Amazon, and lowering the price of its latest entry model, iPhone 11, by nearly 16% compared with last year's similar model, iPhone XR.

"While taking the competition head-on, Apple’s current focus is unmistakably on building a sizable subscriber base and, driving revenues for both services as well as hardware," said Prabhu Ram, head of intelligence group at Cybermedia Research. “It will push other players to take note, and cut rates as well,” he said.

The pricing of the streaming services at Rs 99, to be launched on November 1 across iPhone, iPad and Mac, and on other platforms such as Amazon Firestick for non-Apple users in the future, makes it not only amongst the lowest in India, but also the cheapest monthly plan for Apple anywhere in the world. In the US market, for instance, the monthly plan is $5 (about Rs 350), said market watchers.

The Cupertino-based smartphone maker will offer a year of the service free with sales of its new iPhones -- iPhone 11, iPhone 11 Pro and iPhone 11 Pro Max -- and iPads. At the same monthly pricing, Apple has also opened up its gaming service called Apple Arcade to India as well.

Market watchers feel that the move could help push sales of its devices including iPhones, thereby propping up revenue and profitability.

"The key message from Apple is that though hardware incremental innovations will continue to happen, future is all in content. Apple wants to stay focused on revenues with profitability and it cannot come from hardware alone," Faisal Kawoosa, founder of market research firm TechArc, said.

Apple is launching all its iPhone 11 devices, including its pricier models, on September 27. The company on Wednesday also dropped the price of its erstwhile best-selling model in India -- iPhone XR -- for the base 64GB model, besides those of iPhone 8.

Analysts described the price of Apple’s iPhone 11 base model of Rs 64,900 as ‘aggressive’, given that last year’s iPhone XR’s base model price was Rs 76,900. In contrast, the price drop of iPhone 11 base model in the US is just 6.7% against the comparable iPhone XR model.

Hong Kong-based market tracker Counterpoint Research associate director Tarun Pathak said the pricing of the iPhone 11 is quite aggressive in the Indian market and is set to become a best-seller for Apple.

“Apple must have looked into how sales of the older iPhone XR had gone up in few territories like India after the price was dropped in April, which is why it has priced the iPhone 11 at a similar range. The new iPhone models will have maximum shelf life this year during the festive season unlike previous years when they were launched 1-2 weeks before Diwali,” said Pathak.

Counterpoint estimates that iPhone shipments in India will grow this year due to the aggressive pricing of iPhone 11, unlike last year when shipments contracted to 1.7 million units from 3.2 million units in 2017.

Retailers say this year for the first time Apple may drive iPhone sales volume in India during the crucial September to December period on the newer and pricier models unlike earlier years when the sub-Rs 25,000 models would drive sales.

“Enquiries have already started for pre-booking of iPhone 11. Apple may also have EMI offers to push sales. The price drop for iPhone XR will also make it a good sales grosser,” said Subhasish Mohanty, chairman of cellphone retailer Spice Hotspot, which runs over 100 stores in the North and East.

Apple’s India journey though has been bumpy so far, with its market share currently hanging around 1% by volume and 3% by value, due mainly to a lack of demand for its historically expensive phones in a price-sensitive market flooded with affordable high-spec devices of Chinese players such as Xiaomi and OnePlus.

But now, the company has re-calibrated its plans and is focusing on increasing revenue and profits from its premium devices -- and not volume market share through sub-Rs 20,000 devices -- besides its new services, backed by its move to open its iconic super stores, and expansion of its local production capacities of even high-end models and exports out of India, said analysts.
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