Apple will reportedly re-launch unlocked iPhone 3GS in India

I actually suspect that Apple is doing this (and also releasing the unlocked iPhone 4 internationally) in order to cut down on the kind of buying and reselling of the next iPhone that plagued the iPad 2 launch. That explains the timing of these decisions in relation to the anticipated launch of the next iPhone in September. One reason to sell the unlocked 3GS is that its price will compete against gray market prices of more recent models, reducing the profitability of gray market iPhones. Another is that 3GS production won't directly interfere with production of the more recent models.

Apple will have to expand its international retail presence, but it can't possibly meet this high demand in the short term. I'm not sure what they can do about this, really. Apple has never had a product before for which they had to ensure a stock of tens of millions in the weeks following release, and they don't have the ability to do a simultaneous worldwide release.

I comment here as an Indian (in the UK) with lots of friends and family back in India:

The Indian government plays a big part in prices of goods in India, imposing heavy import duty taxes on electronic goods ostensibly to generate a home electronics industry. India has seen this growth in manufacturing of PCs, home entertainment stuff and white/brown goods. I believe there have also been attempts to build some kind of handheld device to compete with iPad.

Bribery and corruption also play a part in Indian life (a train ticket from Mumbai to Delhi costs ticket price + 50% to 100% bribery tax -- next time take a domestic flight!). At some point, Apple will have been in "negotiations" with Indian ministers and the price for entry to this lucrative market will have been high (does Apple do support from India?)

Even though things have improved greatly, I have been at Mumbai Customs and seen returning ex-pats crying and wailing because the Customs Officer wanted a backhander, or more likely, had his eye on something and wanted to "confiscate" it. Foreign electronic goods also attract a high premium, and are almost not worth taking with you unless the quality and the cost of the item is worth it.

Yes, Indians have climbed up the income ladder, but home-produced goods are far cheaper than imports, though not as cheap if they came duty-free from China. Try buying US or EU goods, and you pay through the nose. Don't expect a Mercedes or BMW or Audi to cost the same in India as in the EU.

There are a lot of mobile phones in India, and they probably already outnumber landlines, but 90% of these phones are dumb-phones -- they are small, make calls and store some media. I had a 70-year old visitor from India staying with us when I bought my 3GS, and he went crazy for it, even started using it like he'd been doing it all his life -- the shame was that he couldn't afford one and I couldn't get him one as a gift. Despite the iPhone4, I still get a similar reaction from other Indians when they see my 3GS.

I think Apple is making the right move with the unlocked-3GS intro to India, because the vast majority of Indians will be happy just having a 3GS and will potentially become iP4/5/6 owners in the future as they keep moving up the income ladder. Indians are savvy enough to know the difference in quality between Apple devices and Android handsets, and will also differentiate between iOS & AndroidOS. There are a lot of apps in the AppStore that originate in India.

I also think Apple should treat the iP3GS as a "loss leader" and mark-up at 2.5% to 5% rather than its usual 25% to 35%.