iPhone iN iNdia

The iPhone takes on USA today. The newest member of the Apple family is publicised as the coolest gadget on this planet, and no wonder thousands have queued up outside shops since Monday for this product that shall be launched today. The fact that this baby comes with a price tag of 599$ (for which you may get a PS3 easily), and a two year contract with AT&T (that's another 60$ per month) hasn't detered this nation of gizmo fans.

I was debating with Vivek the other night on how would India react to the iPhone. I said that this might do quite well, as we have taken the iPod very well, and other phones like the Nokia N-series (which I may call multimedia phones) are quite a success. Besides, I believe that most people are tired of the Motorazor now and need something sleeker and cooler. I am not much of a gizmo fan myself, so I have no idea about the market for these things; I am quite content with my good ol' Nokia 2300, which boasts of just a radio besides the usual features you would expect a phone to have.


Vivek differed though. He said the iPhone is being hyped for its wireless internet capbilities (some 3G thing he told me, I didn't grasp most of the technical part) - and he doesn't see a huge market in India for this 'coz of this reason. In India, we may just look at the iPhone as an enhanced iPod, and nothing more. And maybe it won't be all that worth to spend so much on such a gadget if it offers little gain in the place where you live. And the cellular industry in India is just coming out of the traditional cell phones to the new multimedia phones, as I call them. It hasn't been long since we have had such phones out there, and he feels Apple may not consider investing in India any time soon, given the small size and the diversity of the market out there. Besides, given the high cost of the iPhone, only the affluent ones will be able to buy it, which makes the market size even smaller.

I beg to differ though. The iPhone is surely costly, and more of a luxury than a fancy phone if you ask me, but then India is slowly learning to take in new fancy products over traditional ones. The obstacles that I see that Apple might face in India is stiff competition and a tough exit if the market fails. I think the stiff competition part is justified, so let me focus on the tough exit part. Considering the small market size and the novelty of the iPhone, I think huge sales early on after launching will be like Apple canibalising its future sales. I don't see the market for a gadget like iPhone to rise in India hugely after the product is launched. So the iPhone market in India may stagnate in quite a short time, say few years. Considering the amount of corruption in the country and the amount of market regulations, I think exiting the market won't be all that easy. I feel Apple should enter India with a different business strategy, otherwise I don't see a good scope for the iPhone in India. True, people will like it and many will buy it - it might be a huge success when it's launched. But I am not sure of how it will fare in the long run. And considering that a piece sells for 599$ in USA, Apple has surely put in a fortune on this one, and is talking big money - so long run sales do matter, I feel.

I feel it would make more sense for Apple to buy either an existing player(s) in the market, or to collaborate with one/few, so that they minimise the risk involved. Or maybe they can come in with some other fancy idea; like focus on something that's hotter and more accessible in India, than Wifi, say something like TV streaming/Cable TV or something; maybe partner up with some player in the Cable TV market and launch something new. Or maybe they could try an iPhone that is also a useful office tool, or a good help in college or something. You know, some modifications here and there may have a huge impact on their success in the market.

So that's it then. The iPhone hits USA today. Let's see if I get the privilege of actually holding one in my hand while I am here :)