Walk onto a crowded train in New York, London, or Tokyo, and odds are many of the commuters seated there will be tapping away at an Apple iPhone.

Walk onto a train in Mumbai or Delhi, on the other hand, and of the smartphones on board, none of them are likely to be iPhones. That may not change soon, either.

On Friday, Apple’s newest model, the iPhone 4S – which is projected to generate record sales for the world’s second-biggest smartphone seller – is officially launched on the subcontinent.

But a combination of the iPhone’s high prices – the cheapest iPhone 4S will retail for around $860, 32 per cent more than the $649 customers pay for the unlocked version in the US – and a lack of telecom infrastructure to support the bandwidth-heavy device have made India a largely Apple-less country.

While analysts told beyondbrics why they thought India had not embraced Apple, few could articulate why Apple was not more aggressively targeting the Indian luxury consumer market – the same kind of people who buy Berkin bags and Jaguars and Mercedes, and aren’t as price sensitive as the vast majority of Indians.

“If you look at the high end smartphones, the price points are very, very high for an average consumer in India,” said Hemant Joshi, a partner at Deloitte Haskins & Sells. Still, “in India there is a market for niche products – even Audis, Mercedes, BMWs – so I’m sure for the highest products there will be a market.”

Even so, Apple has not entered the market in any meaningful way – there are no official Apple stores, or Genius Bars or big ad campaigns – and part of the reason is that the Indian market simply isn’t as big as its immense subscriber base or explosive growth rate would suggest.

“It [has] nothing to do with the device; it [has] to do with affordability and the 3G coverage,” said one Mumbai-based analyst who did not wish to be named. India “is [in] an evolving phase as far as [3G] coverage is concerned; once the coverage becomes robust then the pickup also improves for these devices.”

According to the analyst, of India’s 850m mobile phone subscribers, only 12m, or just over 1 per cent, subscribe to 3G services, which were rolled out last year.

“It’s [over Rs44,000], I don’t think the Indian market is really a kind of market which can see a pickup at these kinds of rates,” he added. If anything, “it will be a very gradual and a very small percentage.”

The disappointment over the high price of the 4S is exacerbated by the fact that it is released in India just one month after hitting the shelves in the US. The previous model, the iPhone 4, launched in India in March nearly 11 months after the US. Which meant any keen Indian customers will have had the options of the grey market, or getting an iPhone abroad.

The cost of Indian iPhones is from $860 to $1,100, depending on their memory capacity. By comparison, the cheapest iPhone 4S costs around $780 in the UK and around $653 in Hong Kong – the price comes closer in France, where it starts at around $846.

Potential customers took to Twitter, using the hashtag, #ThingsCheaperThaniPhone4S, naming flat-screen TVs and three-day trips to Bangkok, along with a few reality television stars and politicians, as things that could be purchased for less than the cost of a mobile phone.

Also cheaper than an iPhone 4S: most Samsungs, Nokias, and Blackberrys, the handsets that dominate the market.

“Apple is a very marginal player in India,” said Pankaj Mohindroo, president of the Indian Cellular Association, a trade body. “It’s doing very small numbers.”

He said that out of the 165m mobile phones that will be sold in India in the fiscal year ending March 2012, around 400,000 will be sold by Apple. Of the 1m smart phones that are sold each month, he said, Apple accounts for around 30,000.

A spokesperson for Bharti Airtel, one of the two providers that will launch the 4S, told beyondbrics, “While Apple has a uniform base price across the world, the local price differences take into account the import and local taxes as well as changes in exchange rate.”

Mohindroo said India’s “cumulative duty and taxes are lower than most countries”. Import duties, he said, amount to roughly 2 per cent, while VAT range between 4 and 15 per cent, depending on the state. The rupee, meanwhile, has depreciated 14 per cent since August to over Rs52 against the dollar.

Some of Apple’s ads run with the tagline: “If you haven’t got an iPhone, you haven’t got an iPhone…” Perhaps it should change to “If you haven’t got an iPhone, you’re probably in India”.

Related reading:
FT Video: India’s telecom miracle
Trial opens in Indian telecoms case, FT
Bharti Airtel: betting bigger in Africa, beyondbrics
beyondbrics Apple file
China Mobile: fine without iPhones, beyondbrics

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