Apple is looking at Indian market from a very different focal point. India, the third largest smartphone market, growing rapidly compared to any other market in the world and the demand is mostly served by android phones which are much cheaper than IOS sets.
As per the current distribution of market share, iOS only holds 3% and android holds hopping 70% (others: Nokia 7%, Samsung 3%, Windows 2% etc.).
So, if Apple comes up with refurbished handsets, which are assumed to be cheaper than normal iPhones, there will be short term and long term effect on the Indian smartphone market.
It will be expected that refurbished IOS handsets will reduce cost of Apple iPhones drastically and it will obviously create a buzz in the Indian market. The untapped sections of the non-iPhone buyers will start buying iPhones, their exposure to higher quality handsets will dramatically hamper the android market. Though it is difficult to assume that what will be the average price of refurbished handsets, but even if the prices come down to an average of Rs. 10,000 to Rs. 15,000, then the market share of iPhones may see a dramatic increase.
As a promotional activity, Apple will have to target low income and low SEC (Socio Economic Classification) group for repeat buying of smartphones by providing some additional benefits to them. The Challenge for android manufacturers will be limited as the smartphone market is any way growing and the share of android may remain intact, but the scenario may become troublesome if they don’t come up with innovative solutions to the problem. Refurbished IOS handsets will obviously create perception difference among consumers as the new mantra will be ‘high quality at low price’.
Long term scenario:
Though it looks like a win-win situation for Apple, there will be issue for Apple as it has wide spread across several countries. One strategy in one market may impact conditions in other markets too. It will have to clearly differentiate between normal IOS handsets and refurbished handsets as the imagery of the brand is of a premium one. And Apple mainly makes profit out of their premium and loyal consumers.
As the fastest growing economy of the coming decade, Indian consumer’s purchasing power will be growing in multiples. It is expected that Indian economy will be growing by 7% average growth rate in the next decade. Putting this factor into the scenario, it is expected that Indian consumers will go for buying costlier handsets than before. Being a premium brand, or let us say, being a dream brand for many, the future is bright for a brand like Apple. So, hypothetically, Apple may not consider the current scenario as permanent, and may play a wait and watch game. Bringing refurbished handsets may reduce their burden of becoming a leading brand in India, but that will not change the long term strategy of sticking to their core and serve the market with quality handsets.
Selling premium handsets at discounts will definitely boost consumer sentiment as they can fulfil their need of better and more features at a lower price. Number of first time buyers of the brand will increase too. This will help in experiencing better quality, which may create more loyal consumers for the brand.
Price of refurbished handsets may land up in a price range, in which non-refurbished sets are available in the market. There will be a greater risk of non-selling of non-refurbished handsets. So, the price of higher premium handsets with more features, after refurbishing, should end up with a price which is higher than the medium level sets with less features and quality.
Preparation of refurbished sets may have a positive environmental impact. Remodelling of old sets will reduce emission of greenhouse gases. If the unit sales remain constant, the effect of refurbishing will definitely be positive on the environment.