India, one of Asia’s fastest-growing telecom markets. Between 2006 and 2007, sales of smartphones within the nation grew an estimated 31.4 percent. The data-centric convergence device segment exploded at 89 percent, while voice-centric devices shot up by 26.3 percent. As of July 2008, the Telecom Regulatory Authority of India reported total wireless subscribers of about 296 million. About 9.2 million subscribers were added in July alone.

Nokia is the market leader in India but other players like Research In Motion (makers of Ur-smartphone BlackBerry), HTC and Sony Ericsson are gaining traction. But not Apple. It isn’t for lack of interest in the iPhone, says Naveen Mishra, an analyst at IDC India.

Apple’s brand and the iPhone’s design have captivated Indian consumers but the high cost of the device and the lack of a nationwide 3G network has kept away users from buying the phone. “The iPhone has a large fan following,” says Mishra, “but when it comes to buying the device not a lot of people want to spend that kind of money.”

Apple CEO Steve Jobs introduced the 3G iPhone with the promise of $199 price tag at which it retails in the United States along with a two-year contract with the service provider. But in India the device has been priced much higher at 31,000 Rupees ($673) for the 8-GB version and 36,100 Rupees ($785) for the 16-GB model.

The reason for the higher cost? Wireless customers in India flat out refuse to sign legally binding mobile phone contracts. Because they’re not obligated to stick with a service provider, handsets on the subcontinent are always full priced, never subsidized. The iPhone’s limited availability through a contract with just two mobile service operators has cramped sales, says Mishra.

Unlike the United States, India’s telecom market is skewed in favor of prepaid users, who comprise at least 70 percent of total cellphone users in the country. Most cellphone users in India buy their handsets from a retail store and activate it with the carrier of their choice; cellphones are generally sold unlocked.

The iPhone is the exception. It is currently available only on Airtel and Vodafone leaving potential iPhone buyers with limited options. India does not offer number portability and switching carriers means existing users could lose their phone number as they move to a new carrier.

India also does not have the 3G … yet. Analysts expect the first 3G networks in the country to be available mid-2009. For the iPhone in India, sales are unlikely to pick up unless the service providers slash the price of the device, make it available through retail stores and launch their 3G network, says Mishra.

“There’s going to be very limited uptake for the device unless the carriers do one or all of these things,” says Mishra.

Despite weak sales, it is unlikely Apple will push for significant price cuts in the country, say analysts. “Apple throughout its family is willing to forgo large market share for profitable market share,” says Ezra Gottheil, an analyst with Technology Business Research.

Source: Wired