[arcticbull]

Or they keep them the same price and make even more impressive margins. There's a reason they have 87% of the world smartphone profit share [1] and it's not because they're giving them away or passing on the cost savings to their customers.

Import duty on iPhones is 18% and 28% on iPads as of 2015. [2] Wealth inequality in India is pretty high (not as high as in the US, though, GINI 35.6 vs 40.4), and it's GDP per capita is just $1,939. Per your data, they're currently charging $1,100 which is a whopping 57% of GDP per capita.

My gut tells me reducing the price of a super-luxury good by 18% won't increase demand enough to make up for pocketing the 18% savings. That would be like pricing an iPhone at $33,000 in America. I can't imagine reducing the price to $27,000 would dramatically increase the number of buyers. Or a Rolex from $100K to $82K.

I guess we'll see!

[1] https://www.forbes.com/sites/chuckjones/2018/03/02/apple-con...

[2] https://www.labnol.org/india/custom-import-duties/19306/

[simonh]

Apple's market share in India is about 2% while in China it's about 7 percent. Apple's profit margin is generally about 30%.

The import tax in India is now 20%. Lets suppose Apple could increase market share in India to match that in China by reducing prices by the 20% tax, and compare that to keeping the 20% as extra profit but not increasing market share.

2% market share on 50% profit margin (existing 30% margin plus tax margin of 20%) sounds pretty good. However 30% profits on 7% market share yields more than double the overall profits.

Finally, all the arguments you make for charging more apply equally well anywhere in the world. So why doesn't Apple charge India prices everywhere in the world already? A simple argument that increased profit margin always beats higher sales implies that the perfect price point is infinity. At some point this strategy must yield diminishing returns.

[glogla]

> Finally, all the arguments you make for charging more apply equally well anywhere in the world. So why doesn't Apple charge India prices everywhere in the world already?

They kind of do, except they're slowly easing into it. First iPhone was 499 USD for the base model. iPhone X was 999 USD for the base model.

So over 10 years, they slowly raised their prices 100 %.

[iguy]

Or else the cost of producing a relatively small number of phones inside India won't be as cheap as the global HQ operation. If import taxes were the only consideration, you might expect them to open a new small factory when the extra cost of running it was about equal to the taxes.

Quite a few countries have car industries which work roughly like this -- the local VW plant will cost twice as much to run (per car) as the mothership, roughy matching a 100% import tax. (Although in reality there is often more to the story, like producing exactly one model there & exporting those for credit against imports...)

[seanmcdirmid]

India raised it to 20% in 2018. https://money.cnn.com/2018/02/01/technology/india-iphone-tar...

Then there is 12% tax on top of that.

[vbezhenar]

Sales might even reduce, because some people might not consider them luxury enough anymore.