Apple has found a way to boost sales of the iPhone in India, a market where Apple's smartphone has languished with minimal success. The Times of India reported that Apple initiated a smartphone buyback promotion for the iPhone 4, and that sales of the entry level model have tripled.
Through iPhone retailers, Apple is offering a discount of up to a 7,000 Rupee (US$129) on the iPhone 4 in exchange for any smartphone. According to the local story, this is key because it puts the iPhone 4—which retails for 26,500 ($488)—in the sub-20,000 Rupee ($368) market.
In India, as with other emerging markets, carrier don't subsidize mobile phones, putting the full burden of purchase as an up-front burden on consumers. Apple's devices compete at the high end, well outside the reach of even much of the middle class in the world's second most populous country.
The sub-20,000 Rupee market represents a sweetspot for enough folks that the promotion is having an immediate and positive impact on sales of the device, enough to make the iPhone 4 one of the top three smartphones in the country, according to the report.
There is a vigorous market for used smartphones in India, as well, meaning that much of the money given up in the form of the iPhone 4 discount is made up by reselling the used device that was traded in.
It's worth noting that the other two models in the top three are the Samsung Galaxy Grand and Galaxy Note II. Not surprisingly, Samsung copied the buyback promotion almost immediately. The company seems unwilling to cede share to Apple without a fight.
Sunil Dutt, the former CEO of BlackBerry India, told The Times of India that the aggressive pricing strategies from the companies could lead to price cuts from other brands, too.
"The Indian mobile phone market has never witnessed anything like this, he said. "Apple wants to grow fast in India while Samsung wants to protect its turf and keep ahead of Apple."
IDC India senior market analyst Manasi Yadav echoed much the same sentiment, saying, "Aggressive consumer promotional schemes are led directly by Apple, which wants to improve its sell-through and volume market share in India."
BusinessToday (of India) quoted a recent IDC report on the Indian smartphone market that found, "Apple's India shipments saw a sudden surge this quarter, sending it to the second spot in terms of revenue in the overall smartphone market. The surge in shipments can be attributed to the channel restructuring and the launch of iPhone 5 in 2012 Q4. With the newly appointed national distributors - Redington and Ingram Micro, Apple reached out to a consumer base bigger than ever before."
The Indian market represents an entire subcontinent of potential for Apple simply because the company has historically done so poorly there. With 1.2 billion people and an emerging middle class, establishing a market presence in India with the iPhone could go far in offsetting slowing growth in the more mature U.S. and European market.
The buyback promotion launched by Apple is a significant sign that the company is willing to mix things up and make changes designed for local markets, something Apple hasn't typically done. The Indian market is unlike any other market on the planet, and Apple may well have embraced that reality.