Photo courtesy of Apple

When Apple Inc.’s long-awaited and much-ballyhooed iPhone went on sale in the United States on June 25, 2007, company officials hoped for a spectacle. That’s exactly what they got, as throngs of consumers flocked to Apple’s retail stores across the country – some of them waiting in line for more than a day – to purchase the sleek-looking smart phone for the introductory price of $600.

Consumers snatched up approximately 270,000 iPhones during the first 30 hours the device was on sale in this country, and another 220,000 iPhones in July 2007 – the first full month the iPhone was available – according to iSuppli Corp., an El Segundo, Calif.-based market-research firm. The hoopla surrounding the iPhone’s U.S. debut was reminiscent of that which enveloped the June 1998 release of Microsoft Corp.'s Windows 98 operating system, or even Internet-service provider AOL LLC's decision to offer unlimited Internet access for a flat fee two years earlier.

Given this, Apple officials were optimistic that iPhone mania would sweep India when the device hit store shelves there the following summer. They couldn't have been more wrong: At midnight last Aug. 22, Apple rolled out the iPhone at select locations in India and 20 other nations, but missing were the long lines of people eager to get their hands on the device and the fanfare that accompanied its launch in the United States.

What's more, an unknown number of retail outlets for Bharti Airtel and Vodafone Group Plc – the two wireless-services carriers that Apple picked to sell the iPhone in India – were barred from participating in the midnight launch after local officials determined they did not have the necessary permissions to stay open at such a late hour. The Economic Times – India's largest financial daily newspaper – noted the paltry consumer response to the iPhone's Indian debut in a front-page article that ran the following day. "Only a few buyers turned up at midnight launches done by both [wireless-services providers Bharti Airtel and Vodafone Group Plc] across eight cities in India. At a Vodafone store in Connaught Place, Central Delhi, journalists outnumbered customers by a huge margin.”

Apple declined to say how many iPhones it has sold in India since its launch there, but according to analysts who track handset sales in the country, the company has imported about 50,000 iPhones to India and sold around 12,000 units.

The Indian public’s underwhelming response to the iPhone garnered a tremendous amount of attention – much of it unflattering – from technology bloggers across South Asia and the Indian media. Perhaps the best example of this was an 1,800-word postmortem that appeared in the Nov. 10 issue of Mint – an English-language, daily business newspaper published by New Delhi-based Hindustan Media Ltd. with content supplied by the Wall Street Journal – that dubbed the iPhone’s debut on the subcontinent as the “the biggest failure of a top-notch brand from a well regarded company in recent times.”

What happened? That remains an unanswered question, but people who are familiar with the iPhone’s launch in India – including Apple’s rivals in the country, wireless-industry observers and analysts – say that a flawed sales and distribution model and communications failure contributed heavily to the debacle.

For example, Apple spent very little on marketing for the iPhone leading up to its launch in India; the company purchased just a handful of commercials on Indian television and did not respond to inquiries by the Indian press. Newspapers across the country were forced to report on the coming launch by relying on prepared statements by Vodafone and Airtel – not Apple.

Apple’s Bangalore office – which is actually just a sales-and-distribution operation – was forbidden from responding to press inquiries about the iPhone. Journalists seeking comment were referred to Apple’s Singapore office, which oversees Apple’s Asia Pacific operations, but officials there were no more forthcoming.

“We're a product-focused company," Malini Mitra, Apple’s Singapore-based spokeswoman said. "We don't comment on pricing strategy, market outlook, country strategy, etc.”

Anshul Gupta, a senior research analyst in the New Delhi office of Gartner Inc., a Stamford, Conn.-based IT research and advisory firm, called Apple’s decision not to market the iPhone heavily to Indians “perplexing,” given that it has sold well in other countries outside of the United States.  “The lack of marketing by Apple was noticeable,” he said. “At the time of the iPhone’s launch, there were a few commercials on television in India, but they disappeared within a few weeks. But perhaps that was part of Apple’s plan.

“Technology is now so advanced that people can learn about a new product in so many different ways, from YouTube to blogs to e-mail, that it is possible Apple felt it didn’t need to spend as much on traditional advertising,” Gupta added. “But one thing is certain – Indians are very much aware of the iPhone.”

Suthan

Prathap Suthan, the national creative director for the Indian operations of Cheil Worldwide Inc., a Seoul, South Korea marketing and communications firm, called Apple’s iPhone marketing strategy for India “a disappointment.”

“Apple has produced some legendary ads over the years – Mac fans know this, and so do the guys who work in advertising – and so we were hoping that Apple would launch the iPhone here with a deluge of great advertising, but that never really happened,” he said.

“This was particularly disappointing to people like me who work in the Indian advertising sector, because this country’s telecom industry has produced some really kick-ass advertising, but what we saw from Apple was very plain.”

But the lack of an effective marketing campaign wasn’t the iPhone’s only problem in India. The device’s steep retail price may have factored into its poor debut. The 8-gigabyte version costs a little over $700 in India, while the 16GB iPhone is priced at about $825. The corresponding prices in the U.S. are $199 and $299. “A lot of Indians were dismayed when they learned how much the iPhone would cost if they wanted to buy it in India,” Suthan, who works out of Cheil’s New Delhi office, said.

But more than that, it appears Apple’s failure to properly communicate how much the iPhone would cost in India turned off many potential customers. Some industry insiders point to a public announcement made earlier this year by Apple chief executive officer Steve Jobs, who said that the iPhone would sell for about $199 globally. “This upset many Indians,” Suthan said. “It gave them false hope that they could afford it.”