India is cutting the price of the iPhone XR by up to 22 percent in an attempt to boost sales.
Apple has long wanted to make meaningful inroads into India with its potential customer base of 1.3 billion people. However, this is the first time that it been willing to reduce the selling price of one of its latest iPhones in order to do so.
The iPhone XR will now start at Rs 59,900 ($867) as compared to Rs 76,900 ($1,113) previously. This is for the 64GB model. The 128GB model is reduced from Rs 81,900 ($1,185.99) to Rs 64,900 ($939.82). The top-end 256 GB model will be sold at Rs 74,900 ($1,084.63) from Rs 91,900 ($1,331.26) previously.
“Apple runs promotional schemes for consumers, but has rarely undertaken such promotional pricing,” an unnamed executive told the Economic Times. “It is unlikely it can go back to the earlier [maximum retail price] regime for iPhone XR in India now, since it will then be difficult to attract consumers after this drop.”
The new pricing doesn’t exactly make the iPhone XR cheap. By comparison, in the U.S. it starts at $749, while the national average salary is $49,192. In India, it’s $867 for the iPhone XR starting price — while the average median income is $616. But it’s at least a step in the right direction.
Pricing is too high
Tim Cook has previously acknowledged that iPhone pricing is high in India. “We want to do things that lower that over time to the degree that we can, so we’re looking into a number of things,” Cook said — way back in 2016.
However, since then iPhones haven’t exactly gotten cheaper in India. In fact, they’ve gotten more expensive. Part of that is because the iPhones are now expensive across the board. But some of it is India specific too. In late 2017, Apple raised iPhone prices by 6 percent to 7 percent in the country. This was after customs duty on smartphones in India increased from 10 percent to 15 percent and, later, to 20 percent.
Apple has started building iPhones in India, partly to help reduce the cost of importing them. Manufacturer Wistron currently builds the iPhone 6s, iPhone SE and — now — the iPhone 7 at its own facility in Bangalore. Foxconn is also investigating building the flagship iPhones in India, too.
Can Apple turn things around?
At the end of 2018, Apple hired the former Chief Customer Operations Officer at Nokia Networks to try and turn around its India business. This was after it parted ways with three members of its executive team in India. These included its national sales and distribution chief, the head of its commercial channels and mid-market business, and the head of telecom carrier sales.
Apple currently sells just a couple of million iPhones a year in the country. This makes it a tiny bit player in a market where the average phone sells for less than a couple of hundred bucks.
Apple recently reduced the price for some iPhones in China, although not by nearly as much.