India is the biggest market that Apple’s iPhone hasn’t fully cracked. In the first quarter, Apple only made about 3% of the smartphones sold in the country

Still, it’s a huge market and investors think Apple could turn India into a nation of iPhone owners, at least among the country’s growing middle and upper classes, like it did with China over the past 10 years. But there are a lot of reasons why Apple might not be able to replicate its China story in India, Mizuho analysts wrote in a note distributed to clients on Monday.

One of the biggest challenges is that an iPhone is simply expensive compared to other goods. Instead of buying an iPhone 6S, the analysts found, an average Indian could pay a month of rent, or buy five roundtrip cross-country tickets. 

Mizuho Securities

In addition to the affordability issue, the analysts write that:

Other key takeaways with respect to potential adoption of the iPhone in the region include: 1) a lag of about 7-10 years when comparing India’s smartphone penetration journey relative to China; 2) idiosyncratic factors that led to China’s extremely rapid adoption of large-screen iPhones that may not be applicable to India; and, 3) limited near-term contribution to Apple’s top-line from the region.

The relative expense of an iPhone on the subcontinent has led many Indians to opt for the iPhone 5S, which was first launched in 2013 in the United States. 

Apple has already started to produce low-cost iPhone SE models in a factory in Bangalore, India, which reduces the amount of taxes that contribute to the device’s total price. And Apple is reportedly hiring “affordability managers” in the country to negotiate with banks to make loans more affordable to potential Apple customers. 

The Apple brand remains strong in India, possibly due to its high prices. Bloomberg reports on one 34-year-old business professor who recently bought an iPhone 5S: “It’s a good feeling to own an Apple phone.”

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Source: http://www.thisisinsider.com/what-you-can-buy-for-the-price-of-an-iphone-in-india-2017-6

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