In most of the world, when you buy an iPhone, you pay a small initial fee upfront, but the rest of the handset’s price is baked into your two year contract, which you pay off in monthly installments. In India, though? It’s totally backwards… and totally bizarre.
When the iPhone 4 launches in India this Friday, it will cost an astonishing amount of money upfront through carrier Aircel: Rs. 34,500 ($760) for the 16 GB model and Rs. 40,900 ($900) for the 32 GB one.
Here’s where it gets interesting, though. Instead of the carrier subsidizing the cost of your iPhone, in India, you essentially subsidize Aircel to provide service to the iPhone 4 for you for the next twenty four months, with Aircel “paying you back” in airtime credits over the course of two years until you, as they claim, “recover 100 percent of your upfront iPhone cost.”
Well, not quite, since “credits” can be worth whatever Aircel wants them to be worth. I wouldn’t be surprised if, at the end of the day, owning an iPhone 4 in India costs more long term than in America, not less. More importantly, how many people can actually afford to drop $900 on a phone upfront in a country with some of the worst poverty on earth? I guess Aircel’s going after the Bollywood elite.
Update: Reader Shashank Mukundan wrote us to explain how Aircel can get away with this: India is already flooded with gray market iPhones, and many people are already used to paying exorbitant prices for them.
I just read your article on cult of mac and i just wanted to tell the current situation regarding the mobile phone market over here. I’m a huge apple product addict , i own an iMac , a MacBook pro an iPad 2 and all the iPhones and live in a city called Madras in India .
What the folks in the united states and the rest of the world don’t realise is that India is flooded with iPhones and apple products which people pay extraordinary amount of money for , for example my pre unibody generation MacBook pro I bought was for 3000$ in conversion to rupees for what was/is priced at 1999$ in USA .
All the iPhones available in India are grey Market products from Australia , UK , and Bangkok where the iPhones are factory unlocked . I can tell you one thing for a fact , that at least 2 out of 10 people have an iPhone over here , and in the bigger metros the ratios are higher .
The sad thing is that apple always launches the iPhone nearly towards the end of the cycle in India and by the time every potential buyer already has bought his/her iPhone . And the prices we pay for our iPhones are close to 1500$ in conversion and that’s the Market apples losing out on .
And paying upfront for the mobile phone in India is a concept that we are all used to so it’s not such a big deal over here for customers . The funny thing is before we use to pay a 1000$ for a phone and continue paying about 50$ every month to our carriers and that’s how our system works over here which is sad and funny in a way . And it’s just not the elite who own an iPhone . I’m a college student and every single classmate of mine has a smartphone and mostly an iPhone who come from extremely different backgrounds .
Just wanted to let you know a few facts about how the iPhone is so popular here.
Very interesting! Thanks for the perspective, Shashank!