Consulting|Technology|International business

Bought my iPhone 16 GB from Apple

with 3 comments

Every once in a while a revolutionary product comes along that changes everything. One is very fortunate if you get to work on just one of these in your career. Apple has been very fortunate that it’s been able to introduce a few of these into the world. In 1984 we introduced the Macintosh. It didn’t just change Apple, it changed the whole industry. In 2001 we introduced the first iPod, and it didn’t just change the way we all listened to music, it changed the entire music industry.

Well today, we’re introducing THREE revolutionary new products. The first one is a widescreen iPod with touch controls. The second is a revolutionary new mobile phone. And the third is a breakthrough internet communications device.

An iPod, a phone, an internet mobile communicator. An iPod, a phone, an internet mobile communicator…. these are NOT three separate devices! And we are calling it iPhone!
-Steve Jobs
The Apple CEO announcing introduction of the iPhone at the MacWorld 2007.

My newly acquired iPhone

My newly acquired iPhone

I could not hold my excitement and my iPhone did not dissapoint me. Its a cool piece! Its got built-in GPS and tracks my exact position, while on the way to work today, it showed me that I am near Brookfields and Airport road etc. – I was able to track my blue tiny indicator dot as I traversed the lengths of the inner ring road on the way back home from work!

Its further got cool Internet browsing capabilities and all it required is for the AirTel technician to tether my phone to my SIM card which he did (I guess, its the old fashioned product activation).

The learning curve on my Apple iPhone was minimal because I use the Apple iMac at work. We even saw a Mac mini at work which is so small that it passes off as a small box! Apple really knows how to build its products around GUI’s and build it well. Further, the learning is minimal – a terrific experience for the consumer. None of the Airtel technicians at Divashree chambers knew much about how to guide me – I actually learnt a couple of the features myself and demo’ed it to them! Its got a stocks chart (which shows up US stocks, I need to figure out a way to show Indian stocks). Same with weather updates – my iPhone was showing Cupertino CA and New York, USA which is of no use to me right now. I need to configure it to Bangalore, India.

I am going to create accounts for my Email access on MobileMe and of course configure the rest of my email accounts for usage on my iPhone shortly!

Other features are equally cool on the iPhone – I am yet to try its most famed feature – the iPod! Will do so and I can swim anyway in the 16 GB storage space I have. I also need to figure out a way to transfer data to my iPhone so I can read ebooks on the move!

Internet browsing on the Safari browser is nothing short of breathtaking!

I just compared pricing of India iPhone versus that in other countries (say USA and NZ).

Here is the rationale. In the US, they tie the iPhone with a carrier i.e. AT&T. This makes the contract for a fixed period between consumer and AT&T which subsidizes the price of the iPhone. India does follow this business model started way back on Reliance phones (taken from Samsung and LG) in 2003 but it has its shortcomings. My father did not have a great customer experience whilst being a Reliance subscriber with a Samsung handset and he was pretty loyal to them till he decided enough was enough and moved to a better post-paid Vodafone plan.

Airtel and Vodafone therefore have safely stayed away from this subsidizing venture. However, they still do lock the iPhones to the respective providers but the device is ours for keeps. Other thing is that the iPhone unlike the RIM Blackberry does not have a separate activation/subscription plan etc. – its my same old SIM being reused on the iPhone (it already had GPRS enabled on my older Sony Ericcson W810i).

The price in NZ isn’t much different from that in India. Its about ~$700-$800 USD which is not far from the Indian MSRP.

I just reviewed a CNET review of the iPhone 3G and here is what they say about AT&T and the iPhone pricing in the US:

Price may well remain our largest concern. New AT&T customers and most current AT&T customers can buy the iPhone 3G for $199 for the 8GB model and $299 for the 16GB model. If you don’t qualify for that price–check your AT&T account to find out–you’ll pay $399 and $499 respectively. Either way, you’ll pay $15 more per month ($74.99 total) for a plan comparable with the original iPhone ($59 per month). So, while you’ll pay less outright to buy the handset, you’ll make it up over the course of a standard two-year AT&T contract.

(Source: CNET Networks, Inc., a CBS Company)

So, you get the drift. My Airtel plan has no such hidden charges. Its only the additional Internet bandwidth I will utilize that AirTel makes money out of. My plan remains the same, there is a 500 MB per month free download for the first 12 months which helps alleviate that extra usage as well and to top it all, there are no additional GPS usage charges. So, what costs I incur would really be for my AirTel plan and I can expect another Rs. 500 here and there addtional charges. The key here is for people to understand that over the 2 year contract period with AT&T, people will end up paying almost $600-$700 and recurring revenue is far more profitable for carriers (ARPU – Average revenue per user). This is the basic difference people in India have got to understand to compare pricing. Right now, with half knowledge, a lot of them are comparing apples with oranges. I am not saying the iPhone comes cheap. All I am saying is that pricing is not that out of the world or exorbitant and moreover, Apple products have always been known to sell at a premium because of the Apple brandname.

Here’s how we can sum up the iPhone 3G mania (me too!)

This is exactly what my mindset prior and post purchase of iPhone was!

This is exactly what my mindset prior and post purchase of iPhone was!


About the profit to Apple, it is estimated they made a cool $330 million on 3G iPhone sales in the first three days of its launch in the US alone! Here’s a quick estimate written well:

MSRP – manufacturer suggested retail price.

Bottom line: I have become a loyal Apple cult fan!


Written by Naveen Athresh

August 22, 2008 at 1:26 pm

3 Responses

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  1. […] technology, International business, Micro Economics by Naveen Athresh on August 25th, 2008 The Apple iStore at […]

  2. I do not believe this


    August 31, 2008 at 5:42 am

  3. Hi. Good site.


    January 9, 2009 at 7:17 am

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