Why Indians Are Falling In Love With The Apple iPhone Even When It Starts At Around $1,000

BANGALORE, India -- At 11 a.m. on a Wednesday, it's still early for customers to be walking in to one of Bangalore's "Apple Premium Reseller" stores. A couple of college students are among the early ones, looking to hang out at the store, play with the iPhones and MacBooks for a bit, then head out to one of the nearby cafes or back to class.

"They aren't serious customers," confides one member of staff, who doesn't mind having the students spending some time at the store. "One day, they will be," he said, before turning to a 40-something in smart casuals who had just walked in inquiring about the MacBook Air. Shortly afterwards, another man came in -- he already preordered an iPhone 6S Plus on Amazon.com Inc.'s Indian site and was looking to soak up the atmosphere at the store since he had a free morning.

"I'm opting for rose gold -- not for me, but for my wife," said Manas Kumar Satpathy, 41, a sales and marketing manager at an Indian company, who was in Bangalore on a business trip. The iPhone is a gift for Diwali, the Indian festival of lights next month, a time when many Indians splurge on presents for their family. "Last time I gave her jewelry, this time I thought of doing something different," said Satpathy, whose wife currently uses a Samsung Note 2.

Apple's iPhone 6S will cost the equivalent of $1,000 to buy in India, a market without subsidies or contracts just for the 16GB version, and more for the 6S Plus and the ones with more storage capacity. According to research firm IHS, the phone costs $200 to make. The phone sells for around $649 in the U.S. but Tarun Pathak, an analyst at Hong Kong-based Counterpoint Technology Market Research in Gurgaon near New Delhi, says there are other costs involved and factors including exchange rates that feed into the eventual price, while Apple's premium position allows it to price the retail unit considerably higher than the cost of parts.

Still, more Indians today are willing to put down that sum to own an iPhone.

"We have been talking to a lot of consumers as well, and Apple continues to be an aspirational smartphone for them," said Pathak. "They treat it as a luxury to own." Pathak has also witnessed the shift in Apple's game plan and the resulting sales in India.

Three years ago, sales were insignificant, even as Android smartphones were on the rise. In the financial year that ended Sep. 30, Pathak estimates Apple to have crossed 1.7 million iPhone sales in India, a jump from the 1 million for the year before. Apple anticipates it will boost sales after the launch of the iPhone 6s in India. One person familiar with the company's operations in India told International Business Times that as many as 1.3 million iPhones will be sold in India in the first three months of its launch.

The iPhone 6s and 6s Plus will go on sale in India on Friday and some 800 pre-orders have been placed at the stores run in Bangalore by one of the premium reseller partners of Apple, according to another source. The company has other premium resellers and, all told, has some 120 similar outlets in India.

Additionally, India has 300 or so authorized resellers and around 50 mobile stores that sell mostly iPhones. Beyond that, Apple products are available online in India on Amazon and local sites such as Flipkart, large chains such as The Mobile Store or the Tata Group-run Croma stores, and several thousand other electronics stores.

Apple is fast establishing itself in India as the premium brand that it is in the U.S., points out Rushabh Doshi, an analyst a Singpore's Canalys, a market research company. "There is no dilution in the brand due to the presence of low-cost devices in the portfolio as in the case of Samsung or LG or Sony." That Apple also works on its own completely different platform, as opposed to "mainstream" Android, is also key to how the company sets itself apart, he said.

Canalys estimates that a total of 2.0 million iPhones will be shipped to India in the calendar year 2015, growing to almost 6 million in 2019.

Not Buy, Aspire To Buy

"Three years ago, Apple was just selling MRP (maximum retail price), with cash or card, in India," the second person aware of Apple's operations said. "Then two years ago online happened -- that generated numbers, then Apple too felt they could sell more, and there came all these EMI (equal monthly installments) plans ... now their whole India strategy has evolved, the market has evolved."

Apple's visibility has increased tremendously. From classy television advertisements -- a young man and woman are sending each other shots on iPhone 6 as they head towards their marriage venue -- to hoardings in cities with blowups of photographs taken with the iPhone 6, carrying the tagline, "Shot on an iPhone 6," Apple wants Indian consumers to know more about the features and what the iPhone is capable of doing.

Earlier -- as recently as last year, when the iPhone 6 was launched -- advertisements were designed to appeal to the Indian consumer's sense of value for money, with promotions on installment plans. "There was nothing on the features," the source said.

Now the advertising campaigns are all about aspiration.

"Today, they aren't talking to you about buying an iPhone. They want you to aspire to buy an iPhone."