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Does Apple really need to make a cheaper iPhone for China and India?

Karen Haslam | Jan. 18, 2013
Why are China and India of such importance to Apple, and is it really necessary for the company to produce a budget iPhone to grab market share in these territories?

The cheaper iPhone rumour is based on the idea that Apple needs a low-cost iPhone to compete in these huge markets. Here we examine whether such a device is really the right move for Apple, and what a budget iPhone might do for the companies image if it was available worldwide.

It is clear that China is well and truly on the map at Apple; Apple CEO Tim Cook has paid his second visit to the country in 10 months, and Apple has announced that will extend its plans to build 25 Apple Stores in the country. Apple currently has 11 stores in the mainland China and one in Hong Kong - six of those stores opened last year. Cook also revealed that Apple recorded $5.7 billion of sales in China during the quarter that ended in September.

We hear a lot less about Apple's plans for India, although in an unprecedented move, the company did slash the prices of the iPhone 4 and 4S one week after lowering them following the launch of the iPhone 5 back in October. Apparently Apple isn't too keen on the bureaucracy involved in doing business in India, where it has to tie up with national, regional and local distributors to get its products to consumers, according to this WSJ report.

With this information in mind, why are China and India of such importance to Apple and is it really necessary for the company to produce a budget iPhone to grab market share in these territories.

No. Apple already sells the iPhone 4, and iPhone 4S at a low price

Apple's usual practice that when it debuts a new iPhone it begins selling the old iPhone models at a lower price. For example, when Apple launched the iPhone 5 it reduced the price of the iPhone 4S and iPhone 4 with the entry point for an off contract iPhone 4 being £319. Apple did the same when it announced the iPhone 4 and the same when it launched the iPhone 3GS in June 2009. As a rule, Apple carries on selling the previous year's low-end iPhone and cuts the price of that model. This same practice could work in China and India.

No. Apple is already offering Chinese customers a deal where they can pay for their phone in 2-year installments

Apple has introduced installment payment plans for shoppers in China. Fees can run from zero to 8.5% and can be spread over a two-year period.

Payments can be split into three, six, 12, 18 or 24 installments. Choosing 12 or fewer installments carries no fee. A fee of 6.5% of the selling price will be charged for 18 installments, and 8.5% for 24 installments.

 

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