Apple has found a way to get rid of its old iPhones -- sell them to India and other emerging markets.
The iPhone 4, which debuted in 2010 in the United States, gives Indians the cachet of Apple but at cheaper prices.
“You flaunt an iPhone, but you don’t flaunt an Android,” Punit Mathur, a 42-year-old vice president of a digital media company who switched to a new iPhone 4s from a Nexus 4, told Bloomberg News. The iPhone 5s is too much at $874, but the iPhone 4 is "still an upgrade."
That idea seemed to have double Apple's sales in India and become a competitor with Samsung and domestic manufacturers. That's quite a feat in a country where most of the population lives "on less than $2 a day," Bloomberg reports.
If that idea takes hold around the world, this will be Apple's model for other markets including Brazil, Russia and Indonesia. India will buy 225 million smartphones a year, and Apple has sold 325,000 iPhones last year. But Apple faces competition from China's Xiaomi, which already is a competitor with Apple in China.
“Apple has started to understand India is a more price-sensitive market,” said Katyayan Gupta, an analyst at Forrester Research Inc. in New Delhi. “Indians want to show their status, so people want Apple. It doesn’t matter if it’s a two-year-old phone. It’s an Apple at the end of the day.”
Part of the reason is that unlike the United States, Indian carriers don't subsidize phone costs because customers don't usually sign two-year contracts. The reason? Carriers also don't check credit or enforce contracts. So most Indian customers buy phones from retailers and use prepaid cards for talk time. The iPhone 4 sells at about half the price of the iPhone 5s, which is a reasonable deal to many Indian customers.
For Apple, this is a way to rid itself of its older and refurbished phones and still manage to snag new consumers in the developing world. If Apple's sales do well, the sales model will be repeated in other countries, too.
“You will see Apple bringing back more of its older models in more markets globally,” Hyers said. “It’s a great way to build mind-share and bring them into their ecosystem, and kind of make those customers who have bought these perhaps lower-end Apple devices want to upgrade to the next generation when they can.”