In India, iPhone 3G more likely a consumer device

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As India prepares for the launch of Apple's iPhone 3G on Thursday night, analysts and potential users here said the product will more likely be a device for consumers rather than a business phone.

The iPhone 3G will find more favor among consumers, at least initially, because the business segment already has established products like Research in Motion's Blackberry, said Anshul Gupta, principal research analyst at Gartner. The device is perceived more as a lifestyle product right now, he added.

"We would not deploy the iPhone 3G in our business until the product is proven in a business environment," said K. Purushottam, executive director of Wep Solutions India, an IT services company in Bangalore. Purushottam said he might buy the product for personal use.

Potential customers are also concerned about how the iPhone 3G integrates with existing business applications and their security policies, said Sanjay Anandaram, co-founder of the venture fund JumpStartUp.

Two Indian service providers, Bharti Airtel and Vodafone Essar, are launching the iPhone 3G with much fanfare from midnight tonight. But it seems unlikely that the product will see mass market adoption here any time soon.

One big factor, already reported, is that India does not yet have any 3G networks operational. Airtel and Vodafone have cautioned that some of the phone's capabilities will not be immediately available upon launch. The government has announced plans to auction 3G spectrum this year, and the commercial roll out of 3G services is expected only in the first half next year.

In addition, an Apple spokeswoman said earlier this month that music and video downloads from Apple's iTunes music store would not be available to Indian customers, though they will be able to download applications from the App Store.

Smart phones accounted for only 4 percent to 5 percent of mobile phones sold last year, and their share is likely to grow to only about 7 percent this year, said Gupta, who includes the iPhone 3G in the category of smart phones. This segment of the mobile phone market is expected to grow faster than others, however, partly because of growing awareness of the utility of smart phones, he added.

Airtel and Vodafone may have passed up an opportunity to increase sales by their high pricing for the iPhone 3G in India. Both operators will offer the product with 8GB of flash memory for 31,000 Indian rupees (US$715), a high price by Indian standards. The 16GB version is priced at 36,100 rupees.

If the pricing were more competitive, the iPhone 3G would have a chance of dramatically shifting the Indian market towards smart phones, Gupta said.

A number of people said they backed out of buying the iPhone 3G because of the high price. They had expected the service providers to offer the phones at a lower price after bundling them with service contracts.

People are still expected to crowd the stores selling the device. The iPhone is seen here as an iconic and unique device, meaning some customers will not be put off by its price, Gupta said.

"There is a buzz around this phone, because it takes a mobile phone to the next level of multiple functions in a single device," said Purushottam. The iPhone 3G attempts to bring communications, entertainment and office functions onto one device, though getting the full benefit of this functionality will require 3G networks, he added.

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