Apple takes 14% margin hit to keep iPhone prices steady in India
Apple has decided to take a 14 percent margin hit on iPhones in India in order to avert a rise in iPhone prices, reports Bloomberg. India is expected to become the second-largest smartphone market by 2017 -- trailing only behind China. But in the last 18 months, the value of the Indian rupee has declined, which means it has less buying power. However, while other consumer products manufacturers have raised prices, Apple has chosen to still sell its iPhones at 2012 prices, meaning the company is making 14 percent less on them than they did in 2012. As Bloomberg notes:
Apple Inc. is using the Indian rupee's unprecedented plunge to lure customers in the world's fastest growing smartphone market. The Cupertino, California-based company has refrained from following Samsung Electronics Co. in raising prices. Apple is selling the iPhone and iPad to distributors such as Redington India Ltd. at the same price as in 2012 even after the currency's decline this year, Rajesh Khetarpal, head of Redington's strategic business unit, said in an interview. Apple declined to comment on pricing in India in an e-mail.
Apple is currently in sixth place in smartphone sales in India, but with its willingness to absorb margin hits and the rumored release of a low-cost iPhone today, it seems the company is willing to take short-term profit hits in order to secure a place and increase its marketshare in important emerging markets.
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