Exorbitantly-priced smartphones will suffer most from excise duty hike

These are weird days in the smartphone world. High-specced phones with price tags exceeding Rs 40,000 are being released regularly, while last-year’s flagship phones are being called mid-range. One big example is the 720p display, which no longer befits a flagship, if you were to ask Sony and HTC.

But with the hike in excise duty, these high-end phones will see their prices rise from April 1, 2013. So if Rs 45,000 is exorbitant, how would you classify Rs 48,000 or more? That’s how much phones in this range are expected to cost once the hike comes into play.

When it comes to sales, phones like the HTC Butterfly, the Apple iPhone 5, and the HTC One X+ aren’t record beaters by any margin. If anything, these lag behind the likes of the Samsung Galaxy Note 2, the Galaxy S3, and a slew of mid-to-high-end phones.

HTC Butterfly

So what about phones that were selling at a steady clip, moving around five to six units a day? With the hike, their prices are expected to rise further and make them even more unaffordable for folks who might have once thought twice about pulling the trigger.

HTC could end up losing the most owing to the price hike. Retailers and grey market operators told tech2 that HTC is presently selling very few units of the Butterfly, and will become even dearer after April 1. What's more, its current price of around Rs 44,000 to Rs 46,000 is not low and any increase will hurt its sales beyond repair. Our sources tell us only two to three Butterfly units are being sold every week. That is an utterly dismal number and is not helped by the fact that the phone will play second fiddle to the newly announced HTC One. The company’s other flagship from last year, the HTC One X+, is also selling poorly. But it is unlikely that the company will be importing more One X+ handsets into India and might just escape the duty hike.

Sony, which is expected to launch its Xperia Z and ZL flagships in March, will also be affected by this rise in excise duty. The Xperia Z is rumoured to cost around Rs 45,000. We can expect that figure to climb to around Rs 47,000 once the phone gets here.

Sony Xperia Z and Xperia ZL

LG, which announced its Optimus G flagship a couple of days ago, will also suffer. At the moment, the Optimus G is priced at Rs 34,500, which is a very good price considering the phone's specs. However, if its price goes up to Rs 36,000 or Rs 37,000, then LG might end up with a flop. A December release would've served the Korean electronics giant better.

At such a high price, the Optimus G will be competing against the likes of Samsung’s Galaxy Note 2, which is still the most popular phone among the ones launched in 2012. Approximately two to three units of the Note 2 are being sold per day, easily beating the rest in the Rs 35,000-plus category, with the iPhone 5 in second place.

Samsung’s phones might not be as affected by the hike either. The company dropped the price of its two flagship phones recently, but this could have just been part of the product life cycle. However, if it’s a move keeping the Union Budget in mind, then it’s a brilliant one.

Samsung Galaxy Note II

It's the same case with Nokia, which also lowered the price of its flagship Lumia smartphones curiously close to the Budget announcement. So while its new lower-end phones costing more than Rs 2,000 might be affected by this hike, there might not be as adverse an effect on the Lumia 920 and 820.

Apple iPhone 5

Of course, these are still early days and the real impact of the excise duty hike will only be known once the April 1 deadline inches closer. As smartphone lovers, we have our fingers crossed that the flagships of this world aren’t priced out of the reach of the average consumer.