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Is Rs. 70k too much for an iPhone?

The Apple-Google war goes far beyond the price game. While the jokes about the iPhone 5S India pricing have been relentless, the Nexus tablets and phones have a unique business model with affordable pricing.

brunch Updated: Nov 11, 2013 11:40 IST
Rajiv Makhni

The jokes about the iPhone 5S India pricing have been relentless. You can buy a motorcycle and a cycle for that much money; a small country could get rid of poverty and hunger if they invested that much cash; and of course, the infamous one about how many kilos of onions you could buy instead!

At a price of Rs 71,500 for the top-of-the-line all-new iPhone, all barriers have been broken. From the other side comes a phone that gets everything right and yet has priced itself incredibly well at about Rs 28,000. The Google Nexus 5 has been greeted as the ‘perfect sweet spot for India’ and a phone that teaches all other companies a lesson in ‘phoneconomics’. This is a contrasting tale of two companies that goes beyond just a price game, as the entire ecosystem of smartphones may well depend on which strategy will succeed.

Lessons in Appleism
About three years ago, the line of control for an ‘expensive’ top-of-the-line smartphone in India was about Rs 30,000. No company had the guts to jump that barrier. Apple, with its iPhone 4S, tore down that barrier with splendid disregard for consequences. The new barrier moved to Rs 40,000 and then to a staggering Rs 50,000. Today, almost all companies seem to think that pricing themselves below 50K is equivalent to accepting that their phone is of poor quality.

The price is right? With a iPhone 5S at over 70k, Apple has thrown out the idea that India is a price-conscious market

The new mantra for every company is to announce a phone at a price of around 50K, a street or market price that is much lower, and then have that price drop drastically every few weeks. Once again, the only company that doesn’t follow that diktat is our old friend Apple. Prices remain steady as long as that product remains the flagship offering. That changed last year when Apple came up with some aggressive ‘smartphone exchange’, ‘EMI schemes’ and other mechanisms camouflaged to not look like discounting.

Paying even more for a Free Phone?
This time with the iPhone 5S, the idea that India is a price -conscious market has been thrown out of the window, with the price barrier moving up to a painful Rs 70,000. And with this has come the two-sided duel on justifying and trashing this price point. On one side are the ‘Why’d you think it’d be lower, look at the dollar rate’, mixed with typical Apple Army fanboyism of ‘No other company can give you half as much even at twice the price’. The naysayers have a lot of missiles in their arsenal this time. They compare the prices of the iPhone 5S in Hong Kong, UAE and Malaysia with India, do the math (including dollar rates) and find India’s are 15-20 per cent higher.

The next argument is the much-hyped Reliance scheme, in which the phone is given away ‘free’ with a two-year contract. (This is nothing more than a glorified 24-month EMI scheme with some data and voice call subsidisation; something I had predicted a while ago). Most anti-Apple arguments use this to prove that the entire contract business would never have come into play if Apple was confident of its prices. The conspiracy theorists further state that prices were inflated only to accommodate the ‘free iPhone on contract’ subsidy that every operator would offer on the new iPhone 5S and C as soon as the Reliance-Apple exclusive partnership ran out.

The Google Gauntlet
Enter Google, a company that never plays by the rules either. The Nexus tablets and phones have had a unique business model. These devices are made by some other company (in this case, LG), the features are top-of-the-line, the hardware inside and out is cutting-edge, the form factor is just about adequate, the stock Android OS inside is the latest and is guaranteed updates first, and the price point is so aggressive that most dismiss it as an ill-timed April Fool’s joke every single time.

A good buy: Google's Nexus 5 has everything right and has also priced itself incredibly well

The Nexus 5 takes that legacy forward with more aggression on price and device. This is a super-thin bezel phone that is much slimmer and lighter than its predecessor, has a 4.95-inch full HD Gorilla Glass 3 display with a fantastic PPI of 445, a quad-core Qualcomm Snapdragon processor mated with a Adreno 330 graphic processor, an 8.0-megapixel camera with optical image stabilisation, and Photo Sphere for panorama 360-degree shots plus HDR+ mode. It also has the latest version of the Android OS, 4.4 KitKat, an all-new smart dialler, Google caller ID (like TruCaller), and enhanced voice controls using the term ‘OK Google’. The 16GB version costs about Rs 28,000.

Not all good
Google’s greatest problem worldwide, especially in India, is distribution, its mainly online-only sales model and lack of advertising and publicity. I would go as far as to say that most people don’t even know that a Nexus smartphone exists. With the Nexus 5, that may change with great campaigns, hyper publicity, retail availability and more.

Who Wins; Your future depends on it
Thus starts a new chapter in the Indian smartphone chronicles. A war of equals played out on different price platforms. One bandying a premium device and not willing to let go of that tag despite seeking a bigger share of the market (and resorting to almost any trick in the book for it). The other already owning the Indian market (its OS has captured more than 92 per cent), yet has almost no share in selling its own hardware. A runaway success from either will shape the way we perceive our smartphones.

A smartphone for you will either be a Rs 70K product given to you free, except when you get your monthly bill shock, or you’ll think of it just like you did three years ago, when 30K was a line that was not supposed to be crossed.

Rajiv Makhni is managing editor, Technology, NDTV, and the anchor of Gadget Guru, Cell Guru and Newsnet 3.

From HT Brunch, November 10

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