Mobile telephony is set to reach the next stage of evolution after the two largest GSM operators, Bharti Airtel and Vodafone Essar, launched Apple Inc.'s iPhone on last friday.
Paradoxically, the iPhone may have everything, yet nothing, to do with the changes it's about to unleash.
The iPhone launch by the two service-providers came after weeks of hype and hoopla, but sadly, proved to be a damp squib. Although the smart phone's amazing new features kept the "wow factor" intact, the long-winding lines that sprang up in front of iPhone stores elsewhere in Asia ahead of the launch were conspicuous by their absence.
The reason? The iPhone pricing is so steep that several potential customers were massively disappointed, even outraged, going by local media reports. The princely sum of 31,000 rupees for the 8-gigabyte iPhone and 36,100 rupees for the 16 GB version was too high for even such a cool gizmo.
Additionally, Bharti is asking for a deposit of 5,000 rupees, while Vodafone is reportedly seeking twice as much. What's worse, India has yet to auction the frequency spectrum required by mobile operators to start offering 3G, and a formal 3G launch is estimated to take up to a year. So even the rich, cool dudes who manage to get themselves an iPhone will only be able to enjoy the low-speed applications that they had access to anyway on their phones earlier.
During the April-June quarter, Bharti earned 350 rupees a month as average revenue per user, implying that the company's average customer can continue using the old phone for 9.8 years more, if he or she decides against buying a 16 GB iPhone, at a cost of 41,100 rupees (phone cost of 36,100, plus deposit of 5,000 rupees).
Put another way, a fresh graduate recruited by one of India's leading software companies will have to pay 1.6 times his or her pretax monthly salary of 25,000 rupees to satisfy an impulse to own the iPhone.
Needless to say, Apple needs to rework its iPhone pricing in India if it hopes to attract a respectable number of customers in this poor but rapidly growing economy. Even if it doesn't, other mobile operators and other handset makers probably have much to gain from the iPhone's launch anyway.
The iPhone's biggest contribution to India will likely be the power of persuasion it brings along. For every iPhone user flaunting the smart phone's cool features, there could be at least a dozen others who may want to upgrade their own phones to handsets that offer more features, but are more modestly priced. And several others may be tempted to explore the world of value-added services, in addition to voice and text messages.
The mobile services industry in India has thrived over the past few years as call tariffs continue to fall, even after seemingly touching rock bottom. As compared to around 16 rupees a minute or more in the late 1990s, local outgoing calls now cost 0.60 rupees a minute. Local service providers are currently adding an average eight million customers each month, making India one of the fastest-growing mobile-service markets in the world.
The industry's average revenue per user, meanwhile, has been testing new lows each quarter, as providers penetrate deeper into the country, bringing on board new customers who can't, or won't, spend more than Rs. 500 a month on their phone bills. Most of those customers have so far been quite content using just voice, and perhaps, text messages.
Getting customers to use value-added services such as downloads, or for bill payments, has been a bit of a challenge for local service providers so far. But that could change now, as the iPhone helps improve awareness about the possibilities and raises the bar of expectations. And all industry players, not just Bharti and Vodafone, will gain from the iPhone, whether or not Apple does.
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