Bloomberg speculates that India could refuse to grant Apple permission to sell used iPhones in the country citing comments from a telecommunications ministry official today.
The U.S. company’s application has been turned down, the official said, asking to not be identified, citing official policy [while] Apple declined to comment.
Apple had hoped that used iPhone sales would be a good way to get a foothold in a country where its market share is just 2%, and where 80% of phones cost less than $150. Its iPhone Upgrade Program in the United States gave the company a plentiful supply of used phones that it could have sold at much lower prices in India without sacrificing margin, which must have seemed like the perfect plan …
However, a newly-formed lobbying group last month wrote to the government asking it to refuse Apple’s request, and it appears the government has now done just that. One of the companies behind the Mobile and Communications Council which opposed Apple’s plans is competitor Samsung.
A refusal – which follows a similar one last year – will be a setback to Apple, but not one which will delay its expansion plans for the country, which include the first ever official Apple Stores in the country. Its ambitious plans are said to include a flagship store based on the iconic Fifth Avenue design.
Photo: Associated Press
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Callow behaviour there from the Indian government. But ok, let’s see if Samsung is able to sell their IND 48,900 flagship phone.
Although it might generate clicks, this has less to do with Samsung and more to do with India’s ‘Make in India’ initiative. Bringing in a ton of Apple refurbs doesn’t accomplish the goals of ‘Make in India’. I know it’s less sexy than “Samsung coerces India to thwart Apple” but it’s a more accurate depiction. Agree or disagree, India wants companies to have skin in the game. If you want to sell here, make it here. Provide jobs and opportunity and in return you get to sell to our people. I have no dog in the fight so it really doesn’t affect me either way.
That’s why Apple has to apply for permission in the first place, but I think it likely that lobbying played a role in the decision.
Apple can build new or refurbished iPhones in India, it’s just a matter of picking the outsourcing partner to do it and to set up the production lines to make either product. The only real difference is the refurbished models would get some of the parts from their central depot where they disassemble the used phones. I believe Apple replaces the battery, screen, case and potentially buttons and anything else internally with new parts, but it’s the main logic board that’s used, but tested to meet the same standards. I believe Apple is talking about opening mfg plants in India using an outsourcing company, but it’s just a matter of setting up the lines for refurbished or new product, which is determined ahead of time.
With all due respect (I love your articles), I disagree with Ben. It is unlikely that lobbying played a role. Government of India has rejected the exact same offer from Apple twice earlier. It was reported here on 9to5Mac too.
I agree with Christopher. Samsung, Sony, Motorola and others have their manufacturing plants in India and they contribute to ‘Make in India’. Having said that, the Government is about to allow Apple sell their products in ‘special category’ in their own stores (unlike now, when their products are resold). It is only the used products that the Government has a problem with.
Apple has closer relationships now with the Indian government, though (hence the deal on stores), which is I suspect why it thought it might succeed this time.
I agree Ben. In fact, Apple has a far better relationship with the GoI than other Indian manufacturers or the likes of Samsung. Cook had an extensive meet with the PM, which cannot be said about others. The PMO itself is playing an active role in approving Apple Stores in India. It is more likely for India to abide by Apple’s lobby, rather than by the lobbying headed by Samsung.
@Ben Lovejoy. My point wasn’t to deny lobbying efforts influenced the decision. Clearly it did. The MCC was formed specifically to influence mobile policy in India. The issue I had was the headline. Sammy wasn’t really germane to the topic and was a one sentence mention in the article.
It’s interesting that our freedoms in the US have been more and more limited since President Wilson, and yet, compared to a police state like India or China, we are a lot better off than most people in the world. I can’t imagine the US government blocking sales of a foreign company’s products to protect local companies or trying to extract concessions like manufacturing facilities. Aside from tariffs and safety regulations, I don’t know of any restrictions we have.
US and US based companies use another mean to intervene the sales of foreign companies’ products. Slapping high tariffs on foreign products if they over take US market.
That may be true in some cases, however, that is different in two respects.
1. Most developed countries are part of free trade agreements with the US. That means no tariffs in either direction.
2. A high tariff is far different from an outright ban. When you can’t buy a product at any cost, that crosses a line. It’s like the people in a single payer government healthcare system that come to the US for medical procedures. The country they’re in is a single payer, so the government determines on a case by case basis if a medical procedure is worth giving to you. If the government won’t allow it, you can’t pay someone there to do it no matter how much money you have.
We block Chinese routers because of national security concerns. Foreign food products on sketchy healthiness concerns, or endangered species concerns. There’s a long list of US objections.
There’s also a long list of subsidies that make it impossible for say, Caribbean sugar producers to sell their products in the US. Bailouts to steel or auto producers. Financing deals for our airframe manufacturer. Food giveaway programs that dump our surplus while making it harder for external farmers to stay in business.
Every one of these was nudged, sometimes shoved into existence by a trade group or a company lobbying.
Here is not the place to debate the *wisdom* of our trade policies, but there can be no doubt about their existence, and their importance to US businesses. We tend not to notice the log in our own eyes while we see the splinter of other nations trying to build their own businesses.
I can fully understand India supporting local manufacturers but they definitely shouldn’t be listening to Samsung’s whinings about blocking used iPhones. The Indian government should do whatever is best for the country and I suppose consumers don’t have any say in the matter. Well, it’s their loss if they really wanted to own an iPhone if they can’t afford a new one.
It comes to something when Samsung is so alarmed about sales of refurbished old iPhones impacting on sales of brand new Samsung phones that they have to resort to these sort of tactics.
Presumably this ban only applies to Apple selling refurbished iPhones in India. If an Indian company were to acquire large numbers of used phones and sell them within India, I would assume that it would not be against the rules. It sounds to me as though a strategic partnership might be the way forward. Apple doesn’t need to make much of a profit from doing this. It would be more useful to pull the rug from under Samsung and to to give less well-heeled Indian customers some hands-on experience of iPhones.
Nopes All Refurbished Smartphone cannot be legally sold in india.period.law is the same for all people
That is not completely true… Amazon.in is selling refurbished products… I dunno if its company refurbished or third party refurbished.. but to the end consumer refurbished is refurbished right?
https://www.amazon.in/b/ref=sd_allcat_sa_menu_mobile_refurbished_mobile?ie=UTF8&node=8880481031
Didn’t realize India’s government was so locked down. What an odd thing to do, prevent a company from selling refurbished/used phones.
In India Apple does not work with cellular providers to subsidize the iphones equivalent to $200 or less. If iphones were selling for $650 a piece its anyone’s guess how many people would buy it in US.
The major carriers did away with subsidies a year or two ago. The iPhone 6S debut set a record anyway. So, I don’t think it’s making as much of a difference as you think.
I never really understood why they call them “subsidized”. All these carriers do is they buy the product from the mfg at a specific price. Then they charge the customer a deposit ($99. $199. $299, depending on the model), which is a fairly substantial amount, and then they essentially “finance” the balance over a 2 year period, so what’s “subsidized” about that? It’s just financing. The customer ends up paying MSRP over the course of 2 years. I don’t know what Apple charges the carrier for the actual product. Do they get a “reseller discount”? If they do, then the carrier is a reseller that’s financing the product to the customer.
ya but still u get phones in monthly installments.. not the case in India… and with all the taxes the iPhone is costlier in India than anywhere in the world
While I don’t blame 9to5Mac because they are merely talking about the Bloomberg report, I think there’s some misunderstanding about the decision. This is not the first time the Government of India has rejected Apple’s proposal – it’s the third. Both the times earlier, they rejected it saying that “it has the potential to convert India into the world’s dumping yard. It will only contribute to India’s eWaste generation and landfill”. Now I agree with this because no government will allow a company to import used phones from around the world to “sell” it to their people. I’m sure Apple is not that company, but a Government needs to be fair. What if car companies want this next?
Someone here commented that Indian Government’s decision in not in the interest of its people. I’m not sure how can one say that – just because India doesn’t allow a company to dump all its eWaste there? Because surely many companies have been selling their new products in India since years – even before when Steve Jobs had said India is hopeless – and Apple too is about to get permission to have their own stores.
I think it’s a fair decision. And knowing Apple, they’ll surely find out a way and I’m sure the Government will agree once they are convinced by their strategy to address eWaste.
iPhones are tiny. They certainly can’t contribute meaningfully to eWaste. One small landfill could take the entire iPhone waste of India and never bat an eye. Or Apple could be mandated to take back the phones for some payment, like $10, which would make everyone take their phone back instead of throwing it out. Apple is prepared to recycle iPhones in bulk.
This is about India wanting products sold to its people to be made in India. But the manufacturing base to make iPhones is not there.
Surely you cannot be serious sir, right? (Tiny iPhones + tiny chargers + tiny wires) x 10,00,000 = Not so tiny junkyard. Also, the Government is about to permit Apple sell its new products and have their own stores, giving it a special category status, in a few weeks. So it’s not about a manufacturing base.
Um, Apple recycles, so the parts of the phone that gets recycled, gets melted down to raw metals/materials and sold off to get reused. So, they are recovering metals like gold, aluminum, steel, etc. etc, plastic, and whatever else they can extract. It’s not like they are taking the entire phone and tossing it in a hole in the ground like they would have done in a pre-recycling era. Apple, like many companies, have progressed from dumping finished goods in a hole in the ground. :-)
With these new robots, they want to tear apart the units and have things like the logic board reused in a reconditioned unit as long as the board passes diagnostics. I believe the case, battery, buttons and screen is new, it’s just part of the guts that are reused from phones brought in through a trade in program, or returned for whatever reason. Apple does sell refurbished iPads, Macs, etc. on their US website, they just don’t have refurbished iPhones listed, but if you look at Apple Support, they used reconditioned iPhones as warranty replacements or they sell them instead of repairing if the repair costs exceed the price for a reconditioned unit.
I believe Apple wanted to have an outlet to sell reconditioned phones as people trade them in since they are promoting the Trade Up program, so they’ll be seeing a LOT of phones coming back after 12 months of use when the customer upgrades to a newer model.
Yes, Apple has been looking at setting up mfg plants in India to actually make products in their country. Whether they are set up to make new or reconditioned, is not a big deal, it’s just where they get the parts that are being reused. The assembly process is identical.
Apple already has had a recycle program in the US for years. What they do is you list what you have, the condition, they give you a quote, then you send it in and they give you store credit. And you can use that towards the purchase of anything else.
Here’s some links. All they would have to do is setup the same thing in other countries they want to. In the US, they’ve been using Brightstar for years. I remember them offering this something like 4 years ago. They offer fairly reasonable prices in comparison to other recyclers like Gazelle, and others.
http://www.apple.com/recycling/
Perhaps I am wrong there is no stopping third parties from importing refurbished iPhones.
Apple is being polite but eventually no govt can stop the importing of refurbished iPhones.
The Indians importers will find a way.
Trust me I know them
India is just establishing how Apple is to conduct business directly. What gets imported outside of Apple is something Apple can’t always control. The black market has been around for many years, but the only thing India can do directly with Apple is giving them approval on what they can and cannot do.
I wouldn’t give Samsung credit for doing much at all but merely piling onto the Indian government’s established policy.
Samsung isn’t a leader; it’s a copier.
The thing is that Samsung does more business in India and they probably have Government officials on Samsung’s payroll treating Samsung a little better. You know, typically politics. Don’t think for one second that members of the Indian Government are always upstanding and honorable. Many of them are corrupt just like any country has corrupt politicians setting rules for businesses. Obviously Apple hasn’t greased the right hands with enough money to get what they want. Not that Apple has ever done that, but that’s sometimes what it takes when dealing with government officials making the rules of foreign businesses.
It is a bit short-sighted to only see Apple’s failure to secure an agreement to sell used iPhones in India to mean that Apple has not been facilitating selling used iPhones in India. Apple HAS been doing that, where do you think all those returned iPhones went? To Liam, their recycling robot?? LOL, no, not hardly. Apple has been channeling used iPhones into emerging markets for several years, including China and India. They need that market to exist to prime the demand, via an established marketshare, for higher-end “new” iPhone sales.
This should be seen as a pretty significant blow to Apple’s India strategy, which as Tim Cook mentioned several times in the past week–including last night on Mad Money with Jim Cramer–is going to be important for them longer term to play off the ongoing uncertainty in China. Commenters here seem to confuse Samsung’s US offerings with what gets sold in India and China; yes, Samsung sells their flagships there, but the breadth of the Android market is vastly more broad than the iOS offerings. Samsung and the other Chinese and Indian mobile device suppliers also have much lower cost handsets available. And Apple has, over the past several generations, done a horrendous job of giving emerging market customers the “Apple Experience”. (Apple just stopped selling a 8GB iPhone 4s in India not long ago. Seriously.) Apple is painting itself into a corner, where their lack of backwards support for older/slower devices with newer services could end up bifurcating their product line unless they take a margin hit. Something Wall Street has been asking for/expecting, that Apple obviously is reluctant to do, and that has had Apple fanboys foaming at the mouth when mentioned.
The thing is that Apple doesn’t have any Apple Stores in India, they only have a couple of resellers right now. If Apple has been channeling reconditioned iPhones, it’s done through a back door method, or it might be done by these other companies that pay cash for used iPhones. Apple has an official agreement setup with Brightstar (http://www.apple.com/recycling/), but they don’t have anything set up with the others. So, it’s possible that these other recycle companies are the ones getting used product in these countries, but the product isn’t necessarily coming from Apple or through their Brightstar partner.
This seems silly and is why India has not been as economically successful as China in lifting people out of poverty. Refurbished goods are good for the environment and provide an opportunity for consumers to afford products they otherwise would not be able to.