iPhone in iNdia

After a long wait, Apple has finally launched the iPhone in India through Airtel and Hutch outlets.
Though Apple has launched the new 3G phones in India (2G iPhones are now out of production), there is no service provider in India supporting 3G services yet. There are few things one might be wondering about iPhone in India.

I heard that new iPhones costs $199 (8000/-). Why is it sold at 31,000/- in India?
The previous version of iPhone (2G version) actually costed $399 for 8GB and $499 for 16GB. But Apple slashed the prices of the latest 3G iPhones selling them for half the price - $199 for 8GB and $299 for 16GB. But there is a catch here.
Apple changed the strategy with 3G iPhones. Sell them cheap but collect a premium every month. The service provider AT&T for iPhone has increased the monthly tariff by about $10. For a mandatory 2 year contract that iPhone comes with, this increase will account for $240 increase for 24 months. Also the free SMSes (upto 200) provided earlier will cost 5$ now (for 200 SMSes) This will cost another $120 over 24 months. Together the tariff change will cost the iPhone user an additional $360. This explains the $200 reduction in iPhone prices. This is not a new way of fooling the customer but this is the typical way mobile businesses operate in the US. Most of the service providers provide the phone for almost nothing. Few of them sell very high end mobile phones like Palm Treo for as low as $50 if you subscribe for certain service plans. Apple is following the same model now.
But, unfortunately in India, things work in a very different manner. The post paid connnections are not very popular here. There are many cases of defaults and hence even service providers promote pre-paid connections. So the plan of selling the phone for less but charging higher tariff later will not work here. One example was Reliance's 500/- phone where Reliance had sold mobile phones for throw away price of 500/- but charged a rental every month. Reliance faced huge losses due to that. Airtel and Hutch must have learnt a lesson from this. Hence they are charging higher upfront price when you buy the phone without depending on monthly rentals.
In India 8GB costs 31,000/- and 16GB costs 36,000/-

Can I buy the phone from US at cheaper price and bring it here?
This was possible earlier with 2G iPhones. Those phones could be bought at an Apple store and could be unlocked using certain softwares to be used in India and other coutries outside US. But you can't but 3G iPhones in Apple store without subscribing to 2 year AT&T service plan.

Can I subscribe to 2 year AT&T contract at Apple store just to buy the iPhone and later break/cancel the contract? I am ready to pay some nominal charges in the process.
I am not very sure about how the cancellation of a contract works, but otherwise it is very difficult to do so because of the following reasons,
1. Since the 2 year contract is similar to a post paid connection, they will verify your credit worthiness which will require few documents including Social Security Number. If you are not a citizen of US, you might not be recognized as credit worthy customer and hence the subscription might be denied.
2. Even if you get your US citizen friend to buy the iPhone and the contract for you, either you have to pay the monthly charges every month unnecessarily or pay the penalty for breaking the contract.

What are the advantages of 3G over 2G?
There are a lot of new features supported in 3G. Also one major difference is that 3G is lot faster than the 2G. But currently no service provider in India is equipped with 3G service. Though your phone supports 3G, you will be limited by the 2G service from the service providers. It is like buying a Ferrari or Bugatti to drive on Indian roads :) By the way, BSNL has announced 3G service to be launched by the end of this year. Lets wait and see.

Why will iPhone fail in Indian market?
I feel iPhone will not make it big in Indian market because of the following reasons
1. Its quite expensive by Indian market standards
2. Many of the iPhone's killer features like 3rd party applications and Web apps require WiFi connectivity which is not very common in India yet. Even the hacker forums provide applications to be downloaded via WiFi only.
3. Handling iPhone requires some amount of computer knowledge and a lot of geeky knowledge.
4. The media - video and audio files can't be exchanged via bluetooth - which will be a major disappointment for the Indian market.
5. Consumers in Indian market are not ready yet to buy/rent media through iTunes by paying large sum of money (Each movie on iTunes store can cost around 50-150/- Each audio album can cost around 50-100/-)