Would you pay $320 for a four-year-old smartphone? Apple seems to believe that aspiring consumers in emerging markets will. The company has reportedly restarted manufacturing the iPhone 4, which it discontinued with the launch of the iPhone 5s and 5c models late last year. So says the Economic Times, an Indian business newspaper, which cites “three senior executives with direct knowledge of the company’s plan.” Apple will sell the iPhone 4 only in India, Indonesia and Brazil, according to the report.
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Selling smartphones in emerging markets is a tricky proposition. Many of these markets don’t have the system of one- or two-year contracts that subsidize handsets common in the West; people pay full price for a phone upfront. Moreover, consumers want cheap phones but also want cachet. Companies have a hard time finding a balance between the two. Apple tried offering 0% interest financing and buy-back schemes, allowing it to retain a high sticker price (for the cachet) while in practice selling phones at a discount. Indeed, the company kept its price steady in India despite a massive fall in the value of the rupee late last year, effectively accepting lower margins.
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