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iPhone Cost and Pricing


iPhone is a great product and like other great products it comes with its own caveats, the biggest of which is that the iPhone is available only through Apple authorised mobile service providers. Which means you cannot buy an iPhone from your local mobile shop but have to buy it from the mobile service carriers like AT&T, Vodafone, Airtel etc. The only other remaining option is to buy it from Apple's online store, but even here you have to choose the service provider and a particular plan. Apple has recently announced that you will be able to buy iPhone 3G from Apple Retail Stores near you, some consolation.

But remember, you have to choose the service provider and a subscription plan no matter which of the three places you buy your iPhone from. But if you don't want to get stuck with a particular service provider or subscription you can always unlock or “jailbreak” your iPhone. But in this event all your iPhone 3G warranties/benefits will become null and void and you cannot avail future iPhone software updates from Apple.

Apple has announced a cut of $200 in the iPhone 3G prices so that the 8GB model comes for $199 and the 16GB model for $399 in US. Whereas, in India, Vodafone and Airtel, the two service providers are selling the 8Gb iPhone for about 20-21,000 Rupees, which is more than double the $199 (8,000 Rupees) charged in the US. So how come such a huge difference in the iPhone pricing? Well the simple answer is that AT&T wireless subsidises the cost of an iPhone significantly owing to high ARPU (Average Revenue Per User) in the US. Whereas, in India, the ARPU is far lower than in the US, hence companies like Vodafone and Airtel cannot subsidise the iPhone as much as AT&T can. All said and done, the costs of iPhone ownership, whether in USA or India, will be more or less similar over a period of time.

The iPhone faces another hurdle in India in the form of unavailability of 3G spectrum, which simply means that the iPhone's much vaunted 3G feature cannot be used in India as 3G is still a long time coming. This would act as a break in increasing the ARPU and until the ARPU increases, the iPhone is unlikely to cost less.


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