Why Apple's Assembling Devices In India Won't Mean Cheaper Phones

Since when have prices in tech been strictly determined by supply and demand? India's smartphone market is one of the few in the world expected to continue growing - so Apple, as it has always done, will let consumer interest fuel brand awareness, obsession - and pricing. JL

Jon Russell reports in Tech Crunch:

Apple prices the iPhone higher in India than any other country in the world. The cost is (due) to high import taxes since it manufacturers devices in China — and so it figures that any move to assemble devices locally could reduce the price of iPhones in India. (But) Apple is not known to abruptly drop prices and thus the saving could go towards building foundation for Apple’s retail and marketing footprint.
Apple appears to be moving forward with plans to begin assembling its phones in India, but that doesn’t necessarily mean that its prices will drop in the country.
India’s Economic Times today reported that Apple will begin assembling the iPhone SE in the coming months in Karnataka, adding more detail to comments from the state’s minister of IT earlier this month that seemingly confirmed an arrangement.
Apple currently prices the iPhone higher in India than any other country in the world. It is widely assumed that the cost is down to high import taxes that the company is subject to — since it manufacturers devices in China — and so it figures that any move to assemble devices locally could reduce the price of iPhones in India. That’s important, because Apple continues to struggle to gain any meaningful share of India’s smartphone market, which is one of the few tipped to grow consistently.
A recent IDC report found that Chinese smartphone brands dominated India’s phone market in the final quarter of 2016, with no Indian brands in the top five for the first time. Apple, meanwhile, had its best year of sales in India — selling 2.5 million units — but that represents a tiny fraction of overall sales — more than 28 million devices shipped in Q4 2016 alone.
But for those thinking local manufacturing will instantly fix Apple’s issues, the case is not so clear.
“Apple is not known to abruptly drop prices and thus the saving could go towards building foundation for Apple’s retail and marketing footprint,” Counterpoint Research analyst Neil Shah told TechCrunch, pointing out that right now the U.S. firm has no independent retail presence in India.
“Apple though selectively offers discount only during festive season and that could be also 4-5 percent [price cuts] max and not the entire 12-13 percent [saving from local production] will be passed on to consumers.”
Shah also explained that Apple’s initial efforts “won’t be full-fledged manufacturing like in Taiwan or China,” while he estimates that no more than 400,000 units per quarter would be assembled initially, minimizing any potential impact.
Of course, that’s the short-term prognosis, and if Apple is able to scale its India productions — and potentially advance the processes they carry out — then there’s scope for price savings to be passed on. For now, this is a promising development for Apple and its fans in India — but it is likely to be some time before the full impact is felt in the market.