Remember when back in March (it’s just been 30 days?) we had written about Apple’s plan to assemble more iPhone models in India? The day has come and their contract manufacturing partner, Wistron has begun the production process for the iPhone 7 model.
The Taiwanese contract manufacturer has also been assembling iPhone SE and iPhone 6s models in their Bengaluru-based plant. The plans for adding iPhone 7 took shape in March after they received the government’s approval for its ₹5,000-crore proposal.
In an exclusive e-mail to ET, Apple said, “We are proud to be producing iPhone 7 in Bengaluru for our local customers, furthering our long-term commitment in India.”
Will This Lead To Price Drops?
It’s the burning question that has us all up with curiosity. With more and more iPhones being locally produced, does it mean we’ll no longer have to sell our kidneys?
It’s common knowledge that anything imported is always pricey. And iPhones are no exception. Which is why assembling iPhone in India is cheaper thanks to the duty concessions a maker receives on local manufacturing.
And with such plans in place, you’d think it would be good news for you. But is it? Ding! Those who are in the know about this whole matter say otherwise. Instead of a drop in the iPhone 7 price tag, analysts say that Apple will pour more into aggressive sales and marketing tactics with the margins made from the sales. In other words, no price drop expected.
The iExperts Speak
Nakvender Singh, research director at IDC, India, said, “They will use the funds in their channels, for market development purposes most likely.” Apple is really acing the squash-their-dreams game well – first with the cancellation of AirPower Mat and now this. Wait till you hear the explanation. “Apple is price conscious,” he said. Hold on, give me a second to regain my composure from guffawing too hard.
So, what’s the deal? He continues, “iPhone 7 is a low-risk kind of product for Apple to make out of India. To that extent, it (manufacturing iPhone 7 in India) is about revalidating Apple’s India manufacturing capability before they scale up to other models.”
And the salt to the injury is that while assembling iPhones in India means there’s nothing in it for us, Apple’s coffers will overflow. How? Because the price points remain the same, but margins are now higher. So, the rich get richer, and we still sell our organs? Amusing. Not really.
Apple in a New Market
Traumatised from the weakest business year that was 2018, Apple has revamped a lot, from their management to their strategy in an effort to gain its glory back. According to analysts, their move is to treat India as a manufacturing and an export hub more than a mere market for their products’ sale.
Singh added that Apple will not see a miraculous change in their sales graph for 2019. It is, in fact, going to be “sluggish”. But the company’s objective is more than just sudden surge in sales.
They’re running a huge company, and of course, they won’t run head first into anything, unlike a few of us hurtling to the stores after their product launches. Every step they take is with careful consideration, and this move is more about testing the waters in a new territory.
But, it’s as much for us to see as it is for them. Making iPhones in India, especially the high-end models could swing both ways. We’ll have to wait and watch how this scene pans out.
If this news doesn’t bring the Indian customers any benefit currently, the endgame Apple is hoping for might just bring more joy than just price cuts. But for now, let’s enjoy the trailer.