iPhone Hobbled by High Prices in Japan, Lack of 3G in India

Apple's iPhone may be giving competitors a run for their money in North America but when it comes to three of the biggest telecom markets in Asia — Japan, India and China — the company seems to be coming up lame.

The latest sales figures suggest the Jesus phone is struggling to find new converts in Japan. Not far away in India (the second largest telecom market after China) sales of the device are also lackluster thanks to prices that are pushing seven Benjamins for the entry level 8-GB version. And Apple has yet to finalize a deal with Chinese telecom carrier, China Mobile, to bring the iPhone to the People’s Republic.

A combination of high pricing and a marketing strategy that fails to take into account the needs of local markets has left Apple selling just a few hundred thousand units in countries where millions of other phones are sold every month.

Take India, one of Asia's fastest-growing telecom markets. Between 2006 and 2007, sales of smartphones within the nation grew an estimated 31.4 percent. The data-centric convergence device segment exploded at 89 percent, while voice-centric devices shot up by 26.3 percent. As of July 2008, the Telecom Regulatory Authority of India reported total wireless subscribers of about 296 million. About 9.2 million subscribers were added in July alone.

Nokia is the market leader in India but other players like Research In Motion (makers of Ur-smartphone BlackBerry), HTC and Sony Ericsson are gaining traction. But not Apple.

It isn't for lack of interest in the iPhone, says Naveen Mishra, an analyst at IDC India.

Apple's brand and the iPhone's design have captivated Indian consumers but the high cost of the device and the lack of a nationwide 3G network has kept away users from buying the phone.

"The iPhone has a large fan following," says Mishra, "but when it comes to buying the device not a lot of people want to spend that kind of money."

Apple CEO Steve Jobs introduced the 3G iPhone with the promise of $199 price tag at which it retails in the United States along with a two-year contract with the service provider.

But in India the device has been priced much higher at 31,000 Rupees ($673) for the 8-GB version and 36,100 Rupees ($785) for the 16-GB model.

The reason for the higher cost? Wireless customers in India flat out refuse to sign legally binding mobile phone contracts. Because they’re not obligated to stick with a service provider, handsets on the subcontinent are always full priced, never subsidized.

The iPhone's limited availability through a contract with just two mobile service operators has cramped sales, says Mishra.

Unlike the United States, India's telecom market is skewed in favor of prepaid users, who comprise at least 70 percent of total cellphone users in the country.

Most cellphone users in India buy their handsets from a retail store and activate it with the carrier of their choice; cellphones are generally sold unlocked.

The iPhone is the exception. It is currently available only on Airtel and Vodafone leaving potential iPhone buyers with limited options. India does not offer number portability and switching carriers means existing users could lose their phone number as they move to a new carrier.

India also does not have the 3G … yet. Analysts expect the first 3G networks in the country to be available mid-2009.

For the iPhone in India, sales are unlikely to pick up unless the service providers slash the price of the device, make it available through retail stores and launch their 3G network, says Mishra.

"There's going to be very limited uptake for the device unless the carriers do one or all of these things," says Mishra.

Despite weak sales, it is unlikely Apple will push for significant price cuts in the country, say analysts. "Apple throughout its family is willing to forgo large market share for profitable market share," says Ezra Gottheil, an analyst with Technology Business Research.

Meanwhile in Japan, Apple has partnered with Softbank, Japan's third-largest mobile service provider to sell the iPhone 3G. After the initial buzz, demand for the iPhone has fallen to a third of what it was as users cringe at the high cost of ownership for the phone and the unavailability of some features, says a report in The Wall Street Journal.

As for China, despite speculation, Apple seems no closer to signing a deal with China Mobile to offer the iPhone 3G in the market.

For Apple, it may be time to take a closer look at its business in Asia. Unless the company can move swiftly to change its strategy, it may find itself locked out of the largest telecom markets of the world.

When will the iPhone 3G hit the Indian streets?

The much-awaited news about iPhone 3G’s availability in India is out: Bharti Airtel announced that it will launch the iPhone 3G in India on August 22.

iPhone 3G combines all the features of iPhone plus offers 3G networking. It has built-in GPS for expanded location-based mobile services, and iPhone 2.0 software which includes support for Microsoft Exchange ActiveSync, and runs hundreds of third-party applications.

“iPhone has been the iconic technology revelation of this year," said Sanjay Kapoor, president of Mobile Services at Bharti Airtel. “Airtel has been at the forefront of innovation and customer delight in the Indian telecom sector. Introducing iPhone 3G to India underscores our commitment to enrich the communication experience of all Airtel users.”

Customers will be able to purchase iPhone 3G at Airtel Relationship Centers. Details of pricing will be announced soon; for now, it seems Airtel wants to retain some sense of mystery, and speculation, that's been built up around the iPhone 3G's launch in India. And what better way to do it than by keeping the consumers guessing about the price!

3G services to enhance Indian mobile industry

3G service to provide wide range of applications along with faster communication.

Communications Minister A. Raja Friday announced the much awaited guidelines for the auction of spectrum, or airwaves, to launch third-generation (3G) mobile phone services in the country.

The 3G service will not only allow much faster communications but also a wide range of applications such as high-speed net access, video calls, fast music and video downloads, interactive gaming and global positioning over internet.

"Spectrum in 2.1 GHz band will be allocated for 3G telecom services throughout the country," Raja told a press conference here, adding some 60 MHz of spectrum was available for wireless telephony in the country.

"We may give licenses to up to 10 operators. It depends on the availability of spectrum. Initially, we will have five players. In Delhi and Mumbai, there will be two operators only. The validity of the license will be 20 years."

He said a reserve price of Rs.1.6 billion ($40 million) had been fixed for Delhi, Mumbai and all 'A' category circles, half that for Kolkata and 'B' category circles and Rs.300 million ($7.5 million) for category 'C' circles.

The base price would add up to Rs.28 billion for an all-India licence and the government expects to earn more than Rs.300 billion ($7.5 billion) from the auction of spectrum for 3G services.

State-run Mahanagar Telephone Nigam Ltd (MTNL) that provides telecom services in Delhi and Mumbai, and Bharat Sanchar Nigam Ltd (BSNL), which caters to the rest of the country, need not bid for spectrum but have to pay the highest price.

Raja said his ministry was also in talks with National Security Advisor M.K. Narayanan, who has been entrusted with the task of finding out how much of the spectrum available with the defense forces can be used for civilian purposes.

"Once the armed forces release spectrum, we may accommodate more operators for 3G services."

Global telecom companies and new entrants in the industry can also bid but they will have to pay an entry fee for the cost of a telecom license over and above their bid price for the spectrum auction.

"We welcome the government's announcement of its 3G policy and believe this will benefit the entire wireless communications ecosystem," said Kanwalinder Singh, president for India operations of Qualcomm - a major player in 3G industry.

"3G will bring efficient voice and rich data services to Indian consumers."

The first 3G networks were rolled out in Japan in 2001 and since then, over 71 countries have adopted some form of the technology. Many mobile phone subscribers in India - who number 286.86 million today - have been keenly awaiting the launch of 3G services.