In context: Last week, Apple began shipping low-end iPhones to Europe from its Wistron factory in Bengaluru as part of the “Make in India” program, fueling optimism around India’s potential to become a big export hub alongside China. Now, the company has stopped selling older iPhones in the country, as part of a strategy to increase the average selling price and drive revenues up.
It’s been almost a year since Apple discontinued the direct sale of iPhone 6, 6 Plus, 6S Plus and SE in other big markets, and now it’s doing the same in India, a market known for being more price-conscious and harder to penetrate due to high taxes. According to a report from the Indian Economic Times, once the remaining stock from distributors deplete, the iPhone 6S will become the new entry-level model in the country.
To put things in perspective, this will increase the price of the cheapest iPhone available in India by almost $120, where the median net income per capita sits roughly at $1,700 per year, which is why Apple’s move doesn’t immediately make much sense. The iPhone 6S is currently selling for at least $393 and the 6S Plus is discontinued, encouraging people who want a bigger display to go for the more expensive iPhone 7 Plus.
It’s worth noting that Apple’s annual iPhone refresh is right around the corner, and the company typically discounts the older models. Indian sales of iPhones have been disappointing, with estimates of up to 1.4 million units, but the company is working on making iOS 13 more useful for Indians with better language support, improved maps, and an upgrade to Siri’s ability to “understand Indian English.”
The Cupertino giant is known for setting high margins on its products, a strategy that helped it make up in profits what it’s lost in volume. Foxconn’s plant in southern India will start shipping the iPhone XR and XS locally as early as next month, which is further indication that Apple is serious about squeezing some growth out of the local premium market.
Samsung and OnePlus are Apple’s biggest competitors in India, both commanding a third of the premium segment in the country. The first is building the world’s largest smartphone manufacturing plant in the country, and the second is a Chinese firm known for being more aggressive with pricing and for mocking Apple’s efforts to penetrate the premium Indian market.