Apple admits iPhone prices are too high in India

Apple Inc. Chief Executive Tim Cook did something out of character this week in an effort to win more business in India: He admitted the iPhone might be too expensive.

In an interview with India’s NDTV, Cook said India’s market is challenging because of the excessive duties and taxes imposed on foreign companies, but that Apple AAPL, -0.06% is exploring alternatives, such as refurbished phones, in an effort to reduce prices over time.

“Our profitability is less in India, materially less, but still I recognize the prices are high,” he told NDTV’s Vikram Chandra. “I want the consumer in India to be able to buy at a price that looks like the U.S. price.”

India tends to be one of the most expensive markets for an iPhone, given the strong U.S. dollar. iPhone 6 prices in India are 131% more expensive relative to the U.S., according to Deutsche Bank, which released an annual report analyzing prices on Monday. That makes India the fourth most expensive iPhone 6 market behind Brazil, Indonesia and Sweden. For the iPhone 6S, India is the second most expensive market behind just Brazil, according to Deutsche Bank.

“Don’t lose your phone while away in Brazil, India, Sweden, Denmark or Italy, as a new iPhone is most expensive there,” Deutsche Bank analyst Jim Reid said. “The U.S. remains the place to buy a new one, followed by Hong Kong and Japan.”

Cook—who gave the interview after touring India and meeting with potential partners, banks and people in government to better understand how business is conducted there—said the company is analyzing a number of different ways to lower prices in India over time. One thing the company won’t do, however, is sacrifice quality to compete with lower-tier phones, he said.

“We’re only going to make a product that we think is a great product, and that means that we’re not going to compete at some of the other price bands,” Cook said.

One way the company might be able to reduce prices to better appeal to consumers in India is by offering refurbished, or preowned, phones. While there have beenreports that India has blocked Apple from selling used iPhones there, Cook toldseveral media outlets in India this week that he was meeting with representatives from the government to explain the company’s preowned program, and how it enables the company to offer reduced prices while maintaining a high-quality user experience.

The company’s recent focus on India comes a month after Apple reported its first year-over-year decline in quarterly iPhone sales. Sales in China, its largest non-U.S. market, tumbled 26% in the March quarter, led by a sharp decline in Hong Kong,where prices for phones tend to be higher.

A bright spot was India, where sales increased by 56% during the quarter due to the country’s rollout of LTE networks. On a call with analysts last month, Cook said Apple was “placing increasing emphasis” on India and other emerging markets. Apple is also looking to offer all of its services to India, including Apple Music and Apple Pay.

Shares of Apple rose 1% to $97.41 on Tuesday. The stock is up 1.4% over the last three months, underperforming the Dow Jones Industrial Average’s 7% increase in that time.

Source: MarketWatch

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