Bloomberg News

Smugglers Toast Apple in India as IPhone 4S Debut Still Late

November 29, 2011

(Updates with comment from Aircel in 13th paragraph.)

Nov. 25 (Bloomberg) -- New Delhi shopkeeper Fari Khan is one of Apple Inc.’s biggest fans. Still, he won’t be celebrating today when the company starts selling the iPhone 4S in India.

“Apple is the greatest company in the world,” said Khan, sitting behind a counter at his store in New Delhi’s Ghaffar Market. “But I hope they never open a store in India because it will put me out of business.”

Khan, 27, makes his living selling smuggled Apple products and earns a premium in the time between the official release of a new device in the U.S. and its Indian debut. His 10-foot-wide shop, located in a lane behind a Hindu temple devoted to the goddess Durga, the protector of good against evil, carries an Apple logo and the words ‘genuine reseller’ above its glass front.

Apple is cutting the time it takes to unveil its gadgets in India: the iPhone 4S is hitting the market just over a month after the U.S., compared with 11 months for the previous model. Even so, the lag is enough to persuade punters to pay as much as 80,000 rupees ($1,536) for a phone smuggled from abroad and the thriving market for bootlegged iPhones, iPads and MacBooks in India takes the shine off product releases that are such crowd- pullers for the Cupertino, California-based company back home.

Tapping India

Even as rivals Nokia Oyj and Research in Motion Ltd. are tapping India to compensate for market-share losses in the U.S. and Europe, Apple doesn’t have one of its trademark stores in the country. Instead, it serves demand through 25 ‘Premium Reseller’ outlets scattered across the country’s six largest cities, according to the company’s website.

Nokia has more than 200,000 outlets in India and offers 13 smartphone models. Samsung Electronics Co. depends on the Asian nation for 3.3 percent of its smartphone sales, compared with Apple’s 0.2 percent, according to Framingham, Massachusetts- based researcher IDC.

“India could be significant, but Apple seems to be focusing on one emerging market at a time, China, Brazil, the Middle East and then others,” said Kulbinder Garcha, an analyst with Credit Suisse in New York. “They tend to apply the retail lessons learned, one country at a time.”

Steve Dowling, an Apple spokesman in Cupertino, declined to comment on the company’s India plans.

iPhone Vigils

The slow progress of Apple in India was on show at the official Apple reseller store in New Delhi’s DLF Place mall on Oct. 5, the day that the company’s founder Steve Jobs died. As mourning fans held iPhone-lit vigils outside Apple stores from New York to Hong Kong, workers at the New Delhi shop seemed unaware of his identity.

“You are asking about a job?” shop worker Suresh Kohli, 25, said when asked if more customers had visited the store to pay homage to Jobs. “I can check.”

Indians who did wait until today to get their hands on the 4S will pay service providers Bharti Airtel Ltd. and Aircel Ltd. 44,500 rupees for the phone, or 32 percent more than the $649 charged for the 16-gigabyte, unlocked and contract-free phone in the U.S. Unlike many global providers, Indian phone companies do not offer deep discounts on handsets in return for a monthly contract.

Aircel stores in the cities of Chennai, Hyderabad, Kolkata, Mumbai and Delhi and its suburbs were open through the night, said spokeswoman Shalini Sethi.

“Despite it pouring in Chennai, 20 customers had lined up to buy the phone,” she said. Sales across all cities were “robust,” she said, without giving a number.

Switching Tactics

The 8-gigabyte version of the iPhone 4 costs 37,900 rupees in India, or more than the 34,500 rupees that the discontinued 16-gigabyte version cost before the 4S was announced. The lower capacity iPhone 4 costs $549 contract-free in the U.S.

Now that the prices of the phones in India are known, Khan is switching tactics to undercut the official sellers by 5,000 rupees.

“When a smart Apple fan sees them charging 50,000 rupees while we sell for 45,000 rupees, where do you think he will go?” he said.

Indian Apple fanatic Guldeep Singh bought his iPhone 4S from Khan’s shop where the device was available 24 hours after its Oct. 14 debut in the U.S. Singh said he paid 80,000 rupees for the phone. The average annual salary of New Delhi residents was 117,000 rupees in the year to March 2010, Chief Minister Sheila Dixit said in her budget address this year.

“Apple doesn’t launch phones on time here so I figured out my own way to get the 4S,” said Singh, 36, a garment trader. “Why would I want dated technology in my pocket if I can afford the latest?”

--Editors: Abhay Singh, David Merritt

To contact the reporter on this story: Kartikay Mehrotra in New Delhi at kmehrotra2@bloomberg.net

To contact the editor responsible for this story: Sam Nagarajan at samnagarajan@bloomberg.net


China's Killer Profits
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus