Apple has exited the fast-growing sub-Rs 20,000 smartphone category in India to boost its flagging average selling price and profitability which have been under strain in the country lately.
The United States-headquartered company has withdrawn its successful iPhone 4s model which was selling for as low as Rs 12,000, a move aimed at gaining share and acquiring new consumers. It has also withdrawn iPhone 5c, which was selling at Rs 20,000. As a result, its cheapest phone now is the iPhone 5s, which is priced at Rs 24,000, according to people familiar with the matter.
An email sent to Apple did not elicit any response till late evening on Tuesday. This is the company’s first major step towards aligning its Indian product portfolio with global operations after it took direct charge of Indian operations following the exit of its erstwhile country head from the company.
“It’s a step to improve the ASP (average selling price) which was falling since iPhone 4s was till recently one of their highest selling model in India due to its lower price,” said Pulkit Baid, director at Great Eastern, a consumer electronics retail chain in eastern India. According to Counterpoint Research, Apple’s ASP in India increased sequentially during the last quarter of 2015 due to the new iPhone 6s series, but it declined 20% compared to a year ago.
“The recent price cut of iPhone 5s is in line with Apple’s strategy of positioning this model as affordable in emerging countries and will continue to pull aspirational young audience looking to upgrade their smartphones in the mid-segment,” he said. A senior executive, who is a trade partner of Apple, said the company continued selling iPhone 4s in a few emerging markets such as India, Brazil and Russia even after pulling it out of bigger markets like the US and Europe two years ago.
“Their idea is to have an entry-level model at an attractive price to hook newer consumers to the Apple ecosystem which have high retention value. But it finally decided to stop production due to fall in ASP and to boost sales of newer models in most of these emerging markets,” he said, requesting anonymity.