Apple's Push to Flood India with Used iPhones Ignites Backlash | Hacker News Reader

Apple's Push to Flood India with Used iPhones Ignites Backlash

bloomberg.com

71 pointsmastazi78 comments

I understand India's desire to push for local manufacturing, and some of this is all just a bunch of theater dancing around that issue. Meanwhile, the Bloomberg article does a good job of letting us read between the lines about the vested interests in keeping Apple out --

> “The millions of imported used phones will need their batteries replaced. What will happen to those batteries, where will they go?” asked Sunil Vachani, chairman of Dixon Technologies, whose phone assemblies roll out a million phones a month for brands like Japan’s Panasonic and China’s Gionee.

So what do they do with used batteries from other phones? This has nothing to do with whether a phone is imported or not.

If a new phone is sold in India, its Indian owner benefits from the entire multi-year lifespan of the battery before it has to be disposed of. If a used phone is imported from the US to India, its battery will be nearing the end of its life - most of the benefit of that battery goes to the original American owner, but the disposal costs are dumped on India. From this perspective, it's a way for the developed world to dump our e-waste on the developing world and avoid having to dispose of it ourselves.

After a few years I'd cracked the screen on my iPhone 4 and the battery was losing it's charge. I took it to an Apple store and they replaced it with a refurbished model for £100 and it's still going strong. The Apple store employee told me the phones get new batteries as part of the refurbishment.

"If a used phone is imported from the US to India, its battery will be nearing the end of its life - most of the benefit of that battery goes to the original American owner, but the disposal costs are dumped on India."

If it is a refurbished model with a new battery that won't be the case. I have had refurbished Apple stuff in the past and those things were indistinguishable from new devices and yes that included the battery.

I've I read correctly that a company like Samsung is a member of one the organisations that are complaining, I think there are other stakes at play then the green card. Especially when a company like Apple is involved. There is a lot to be critical about, but they tend to do their best in those departments.

The fact that the battery needs to be disposed of sooner should be factored into the price of the phone. I don't see the issue if they are willing to accept a battery which will need to be disposed of sooner in exchange for a discount.

I've heard from multiple sources that no refurbished Apple iDevice has the original battery, they always replace it.

There's something deeply contradictory in India's attitude. For imports (including setting up supermarkets in India) there are levys, laws and regulations to make it almost impossible for foreign companies. But then India is able to export its IT professionals and outsourcing across the whole world. Is this really a level playing field?

Why is no one calling this out as foul play? India seems to want one rule for when it is abroad and another when it's at home.

Donald Trump's trade policy in a nutshell.

I understand what you are saying, but I think it is not true. Being an Indian and having lived there for 30+ years, I can hardly list any major international brand in any industry which isn't selling something there. Also all the big international brands are also big Indian brands, most people do not even care that they are not Indian owned brands.

So yes, huge amounts of foreign brands sell in India, but perhaps with local manufacturing or assembly. It is not a closed country at all.

edit/bid/big

"We shall not entertain foreign direct investment in multibrand retail. There is no ambiguity or confusion on this. The same applies to e-commerce," the minister said in a news conference.

http://www.wsj.com/articles/india-wont-allow-foreign-investm...

This has not to due with manufacturing, but around government protecting the small shops against Walmart. What you may not know is that Walmart is operating in India but as a partner with the Tata group.

The same applies to insurance, lending and banking business. So the brands we have are Tata-Starbucs, Bharti-Axa, Birla-Sunlife, etc.

Foreign policy is not decided based on consistency. Every democratic government has a responsibility to defend it's own citizen's interests.

USA does this also, it wants free trade when it wants to export goods and services to other nations but opposes it when it comes to importing labor ( H1B VISA cap etc ).

This is not evil, it is this competition between nations that improves standard of living for people everywhere.

Labor is not trade.

Mind elaborating ? If you should be for free trade, should you also not be fro free exchange of labor ?

Really? It's pretty obvious.

If you're working in another country, you're not spending money on tax, rent, food, utilities, etc. in your home country, you're spending them in the host country. Most of your income is spent in the host country. For your own example, most H1Bs want to live and spend their money in the US, not send money back home.

So it's actually a terrible 'trade' for the originating country, they lose skilled workers to the US, workers they paid to train and educate, for nothing in return.

What's the 'trade' you talk of? Labor is not trade because what does the home country get out of it?

Free trade is a completely different kettle of fish to free labor markets.

Everything you say also applies to foreign trade of goods or capital with just a little tweaking. Would you consider it "trade" when capital flows out the country, builds facilities in a foreign country, employs people in the foreign country, sells goods to people in the foreign country, and then stores most of the profit in the foreign country?

I'm sure you have heard of Jaguar/Land Rover (the luxury car brand). Do you know who owns it? It is an Indian company called the "Tata Group". Tata Group acquired it from Ford Motors when the luxury brand was on the verge of bankruptcy. This is a brand that is "Made in Britain". Even though Tata Group is an Indian company, it operates the Jaguar facility in England and employs locals rather than Indians for its facilities. The profit is also stored by the foreign country (UK in this case).

Do you also know that many hotels in the USA are acquired by the Tata Group? The Ritz-Carlton Hotel, Boston is one good example. Again, the group employs only locals and has it's profits stored in the foreign country (US in this case).

There is no reason to believe that trade of goods or capital is lopsided to only harm the United States.

I was really just illustrating that the same incomplete (bordering on dishonest) portrayal of the movement of labor can also be applied to the movement of capital.

Remittances from emigrants account for ~4% of India's GDP.

Remittances are possible only once you have savings. By necessity, a certain percentage of immigrants' income will be spent locally.

Sure, but considering the differences in wages, that percentage may be greater than the whole income that worker would have made in their home country.

Also adding to that most of the intelligent people who are moving out and settling else would have studied with governments money from premium institutions

Opposes the importation of labor? Inspite of importing more high-end labor than almost any other country? How can they be opposed to it?

> Inspite of importing more high-end labor than almost any other country?

On a per-capita basis, I don't believe this is anywhere nere correct.

On a per capita basis, any rich country in the Middle East or city state in SE Asia that imports all its workers wins by default. But out of the major economies, the USA is at least up there with Europe per cap, and definitely in raw numbers.

Well it's not about quantity but attitude. India might be the leading importer of a lot of things given the population. But that doesn't negate the defensive attitude towards imports.

There are a lot of people in the USA, some don't like immigration and are particularly loud about it, but they are nowhere in the majority, and definitely not the politicians who are in power making all the rules.

This sort of policy mostly harms India itself and doesn't affect the west that much so there's not much point us calling it out. It's stuff like this that keeps India at around 130 on the Human Development Index, a little above the Republic of Congo in spite of having people bright enough to come and run Microsoft. Go protectionism and bureaucracy!

Are you serious? How is Human Development Index have anything to do with owning Apple devices? Even if Apple is allowed to sell it's refurbished devices it cannot compete with other phone manufacturers who sell devices with better specs at lowest possible rates. And I'm saying this as an Apple fanboy. That is the reality of Indian market. Human Development Index is mostly because of poverty which cannot be eradicated by Apple selling it's refurbished phones in the secondary market.

Not specifically the Apple deal but the general attitude:

>“Why even consider allowing import of used phones when import of other used goods such as cars are precluded by 300 percent duty levies?”

is what creates much of the poverty. Why not just let people buy and sell phones and cars and set up businesses without the government blocking it?

People are already doing it. India has a thriving secondary market if you are not aware. Many can't afford to buy new phones so they buy second hand phones from these markets. But this buying and selling of used devices happens within the Indian market i.e. the seller of the old phone is an Indian and so is the buyer.

The problem is that this is the first time a foreign company has requested the Government to grant license to sell second hand phones in the secondary market. What this essentially means is that Apple would dump second hand phones it receives from it's recycling policy World over into Indian secondary market. If the Government allows this then it sets a dangerous precedent with all other electronic manufacturers wanting a license to sell e-waste in India's secondary market. This is already happening with e-waste being smuggled into India illegally creating environmental hazards. Read this article published in 2007: http://www.reuters.com/article/us-apple-china-idUSKCN0V4200. Imagine the amount of e-waste already imported illegally into India since 2007.

This has nothing to do with poverty or human development index. US environmental laws are strict enough to not allow e-waste from accumulating in US soil. So Apple is using it's "Recycling policy" to dump e-waste in India which doesn't yet have strict environmental laws. If Apple extends it's "Recycling policy" to second hand phones there would be no barrier to entry into India's secondary market. It's up to Apple to clarify it's policy.

>Apple Recycling in India ...

Whatever Apple equipment you wish to recycle, we will collect and recycle it responsibly for free.

http://www.apple.com/recycling/nationalservices/europe.html#...

Trade protectionism is an important tool used by developing countries to develop local industries. Nearly all the Asian tigers benefited heavily from high import taxes for many foreign manufactured and consumer goods. Once local expertise is built up sufficiently, these tarriffs are usually relaxed.

If you go further out in the past, you will see the same thing for the US as well: https://en.wikipedia.org/wiki/Tariffs_in_United_States_histo....

Being an Indian I can also get work outsourced to a developer in a foreign country without having to pay any duty. There are many companies in India that also employ foreign nationals. How can you compare import/export of physical goods with import/export of services/labor? Both are different.

EDIT: Also you are assuming Apple does not have retail stores in India. In fact there are multiple Apple stores in every city in India. There are many who own Apple products but there are many more who purchase Sony/Samsung/Micromax/Karbonn etc as they tend to be less expensive. None of the other companies use India as a dumping ground for second hand phones. Why should Apple be any different?

> dumping ground for second hand phones

Why the negative phrasing? What is wrong with reuse? Would it be any difference if the phones were new? Is it an environmental issue?

Personally, I don't think this is going to happen with these Apple phones. (Although I'd be interested to see what happens with security updates; and how easy they are to use with local languages.)

But.

There have been considerable environmental problems with companies dumping e-waste on developing world countries.

Sometimes this e-waste is described as "used, low cost computing equipment", sometimes it's described as "recyclable waste".

Either of those sound fine. When I hear them I think of a small local co-op fixing the computers and installing free software and distributing them to schools or whatnot. Or of people dismantling and sorting the stuff, and recycling for cash.

What actually happens is something like the e-waste dump in Agbogbloshie, Accra, Ghana.

http://www.bbc.co.uk/programmes/b00sch78

http://www.theguardian.com/global-development/2013/dec/14/to...

If Apple can come with a solution for recycling these second hand phones I'm all ears. So far there is no word on that issue. We already have a lot of e-waste in the country as it is. Adding more to it will cause serious environmental hazards.

The article addresses that point directly:

"To be sure, Apple has some of the industry’s most exacting protocols for recycling products. The company says it typically manages to collect and recycle 85 percent, by weight, of devices produced seven years earlier. Apple’s eventual plan, as stated in its application to the government, is to set up facilities that take discarded phones and refurbish them for use."

That policy is for a first-hand phone. Does the same policy continue for a second-hand phone (which is basically "refurbish them for use")?

Where does it say that?

You seem to be set against this so under what conditions could Apple (or anybody else) sell refurbished phones that would be acceptable to you? Or do they become problem immediately once they are not new?

Does Apple state that the recycling policy applies to any phone irrespective of how many hands has been changed in the process?

Would you be willing to buy a second hand refurbished phone from Apple if the recycling policy does not apply for the second hand phone?

Since the alternative would be "there is no market for reuse of once-used phone", the recycling policy would not deter me. Apple as a seller and I as a buyer are making the world better by providing a secondary market for high-level re-use rather than component/elemental level recycling or landfilling.

IOW, the recycling policy DOES apply, IMO, even if there is no downstream from my use recycling intent (which I think is still an open question from the text and the overall good results Apple gets on recycling).

As a US consumer, I generally buy and use 13-18 month old iPhones until they no longer reliably function or until the battery life is too poor, then I go buy another one-generation old phone. Apple has nothing to do with this, other than keeping the upgrade treadmill going for everyone else so I can get my $200-250 used phones to put on an MVNO (Ting in my case).

"there is no market for reuse of once-used phone" That is not the case. There is already a thriving market for reused phones in India. However this is already creating a massive problem of e-waste and hazards. Read this article: http://www.npr.org/templates/story/story.php?storyId=1121191.... Note that the article linked to is of 2007. You can imagine the amount of e-waste India has imported since then.

If Apple's policy includes second hand recycling then there would be no barriers to entry. It would be good if Apple made it clear. There are too many old phones that are available in the secondary market. This is already creating a lot of e-waste which India doesn't have the resources to dispose off. The only other solution is for India to dump this e-waste to even lesser developing countries but that would be shrugging away responsibility.

The other problem is that, by giving Apple permission, India would set a precedent. If Apple is given permission to sell second hand phones, don't you think other mobile manufactures like Sony/Samsung/Karbon etc would also want similar permissions? They would be happy to create "recycling policies" on paper if that would ensure them access to India's secondary market. The question is who will enforce it?

Apple doesn't have stores in India. Those are Indian-owned retailers licensed to sell Apple products. Indian law won't allow Apple to open their own stores in India like they have done in China.

Apple would only sell second hand phones on India if their was a market for them.

Apple doesn't have to waste money in building stores across India. Isn't that profitable to Apple that they get free access to real estate to showcase its products? Not just that, Apple also earns from providing license to Indian-owned retailers and profits from sale of every Apple device. That is a good thing for Apple is it not?

On the other hand we all know what is happening in China. Even with Apple having it's own store it has a massive problem of dealing with unlicensed copy-cat Apple stores. Read this article for more info: http://www.reuters.com/article/us-apple-china-idUSKCN0V4200

Middle men always drive prices higher as they need their cut, part of the reason (besides taxes) that Apple hardware costs so much more in India. Also, Apple cannot provide the service that they do in other countries.

There are many unlicensed apple stores in China, I live right next to one, but they do not have a pricing advantage compared to the Apple store, so why not just buy there?

In other words, India is trying to look after its own interests instead of being 'fair'.

Is there any country that doesn't do that?

Note: I'm not commenting on whether or not this practice will actually work for India in the long run

I take your point, but India is not exactly unique here.

To name but two, China has similar one-sided regulations and Switzerland has companies that can aggressively mount hostile takeovers of foreign competition, whilst being effectively protected from same (Nestles being the obvious example).

Contradictory attitudes seem quite common!

They want one rule for when it's at home. What rules exist abroad are up to the government of that country, not India.

> The group’s members [who opposed Apple's application] include the largest Indian phone brands: Micromax, Intex and Samsung.

Ah.

Meh. Apple is asking to be treated like a special snowflake in this case, caught by their own elitism of not-selling-affordable-phones.

That may be so, but the "Mobile and Communications Council" (I assume it's a regulatory group) seems to include their direct competition. How sure can anyone be that there's going to be absolutely no conflict of interest?

Just because it has 'council' in the name doesn't mean it can make laws. And even then, why should Apple get a special exemption from a general law?

>caught by their own elitism of not-selling-affordable-phones.

Yeah, and look where that got them. From near bankruptcy in 1997 to being only the most valuable (or in top 3 depending on when you look/how you measure) of companies on the planet.

So... why does that mean that they should get special exemption from a general law?

Apple can't sell in India because they are too elitist to make a model priced for the developing world (which they can absolutely choose to do with their buckets of money), so why should they be allowed a special channel into a market that they want to treat as second-class?

You do know that Apple sells second hand (refurbished) phones (and macs) in the US and West too, and they have been doing that since forever, right?

They want to increase their market share in India, but they're not willing to produce a cheaper phone for that, so they're asking for special treatment. Why should Apple get special treatment that others don't get in India? What is so magical about Apple that they should get this preferential treatment?

It's funny, HN seems to be against corporate sweetheart deals, and loves stories about exposing corruption. But not against Apple! No, we'll not hear a word against those guys - they're special! Hell, when the recent Apple v FBI story broke, people here were talking about this 'the most valuable company on the planet' like it was the scrappy underdog, rather than the behemoth of industry it is.

So... why does that mean that they should get special exemption from a general law?

>Why should Apple get special treatment that others don't get in India? What is so magical about Apple that they should get this preferential treatment?

If the law changes to allow it, then it won't be "special treatment".

What's so special about a random law that much be preserved for eternity?

>It's funny, HN seems to be against corporate sweetheart deals, and loves stories about exposing corruption.

Wanting / Asking to sell second-hand phones is corruption how?

You should be a spin doctor, seriously.

But that strategy did not work for them in India. Hence they are trying to sell cheaper refurbished models.

Well, they have been doing very well in India too:

http://www.ibtimes.com/once-tough-market-apple-inc-indians-s...

http://timesofindia.indiatimes.com/tech/slideshow/appleindia...

In addition, they're trying to sell cheaper phones there.

I don't think they have even 5% market share. (http://www.theverge.com/2015/11/24/9790810/apple-iphone-indi...). For a global giant its very very poor. Hence the need to sell cheaper mobiles.

>For a global giant its very very poor

Not really, as that's not how they roll. They usually have small market share, but of the highest end / largest margin part of the market.

Those 5% can yield like 30-50% of the profits of the whole smartphone industry in India, and 80% of the high-end (more expensive) smartphone profits.

A company that only targets the high end of the market should be compared to other products/companies in that, not the overall.

come on dude don't keep on changing criteria. Anyway "Not really, as that's not how they roll" this does not hold good. They are trying to get a bigger market share in India. Hence they are trying to selling refurbished mobiles. Which would be cheaper compared to brand new. Emphasis on it been "cheap". They already do that selling gen old mobiles.

A strangely-biased article, starting with the headline. But setting aside the concerns of the companies opposing this for obvious reasons, this is a really great idea.

Consumers in poorer countries get the opportunity to buy used, high-end devices supported by the manufacturer, and those devices get another consumer cycle's worth of reuse before they get recycled. Plus Apple can now reach a large new segment of customers without compromising product quality or new-product margins.

Or they can price it according to the market. How many people in US buy iPhone at full price? Most mobiles are sold at full price in India.

> How many people in US buy iPhone at full price?

Everybody. Anybody who doesn't is buying it on credit. They're still paying the full price (and then some).

Installment plans are recent trend isn't it. I see previously it was 2 year contracts for 199 etc. emi are common in India as well. Apple could have done the same in India.

Before Apple offered installments plans, US carriers were offering them. Do Indian carriers do the same?

The sales model is pretty different.

In India, you'll typically buy your phone outright based on what features you're looking for (Dual SIM, OS version, Storage, etc). Hence manufacturers/retailers typically offer a EMI plan for top-end phones (think Samsung S7, Apple iPhone 6, etc) since the outright cost is quite high.

Then you'll decide which carrier you want to use based on the tariffs they're offering (Voice Calls, data, SMS, etc.)

Although carriers do offer phones with their plans, it's rarely ever bought in that manner.

The backlash is just whiney competition. Many people in India see the iPhone as a status symbol. If it is more affordable and comes with a warranty from Apple, people will buy it even if it is refurbished.

I find some of the comments really surprising here. If you notice the headline and the article, you will see, this is about "used" phones from a top tier manufacturer. None of the other companies (Samsung, LG, Nokia...) are doing it.

Please do not compare this to Apple not being present in India. It is, in a large way, just not very affordable to masses, which Apple wants to change by selling old, used phones.

Disclaimer: I am an Indian, with an iPhone 6 and its damn easy to find it anywhere in the country.

I don't see how this helps Apple. They offered cheaper versions with 8GB ROMs in India before. It backfired because though they were cheap it was a shitty experience. With iOS 9 underperforming even on iPhone 5S, I don't see how this more will do anything but tarnish Apple image further.

Indian customers do not want to spend less. They want to spend as much as they can but expect longevity and quality. Historically Apple has provided that.

Apple's iPhone 5S is 20K in India. Fairly affordable for an iPhone. If they are selling refurbished, they are trying to probably nibble at Moto G buyers. Even if they succeed, they are not a segment that is expected to exceedingly spend on App Stores or iCloud storage. That is the segment expecting things like Bluetooth file transfer. That is the segment not paying 1500/month for a decent plan which has enough LTE.

All of Apple's moves these days are operational. It almost seems like COO has a complete run of the brand. Move the inventory. That's all that matters.

I think Apple would have to have a highly backwards compatible and modular iOS for that to even make sense. I have an old iPhone 4 running iOS 6, and I don't think it passes for a useable device. Apple could make the latest iOS backwards compatible, and find ways to reduce computing requirements by omitting functional or visual features, but that would completely counter the current artificial obsolescence tactics. It's unfair to offload those to a developing market, until they decide to support a greater fragmentation of the platform.

I don't see how Apple adding another option is "unfair".

Adding an additional choice for consumers in a market rarely harms those consumers. (An iPhone 4 isn't mass-produced cigarettes.)

Restricting choice for consumers in a market far more often harms them.

If apple is allowed to sell refurbished phones in India surely lot more people will opt for those instead of the cheaper Chinese alternatives or Indian versions and this could be the reason why the manufacturers here don't want Apple in their price segment as it might affect them directly

It shouldn't come as a surprise. There are many reasons why the incumbents don't want Apple entering the market.

http://thenextweb.com/opinion/2016/03/21/apple-hypocritical-...

Damned if they do, damned if they don't.

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