Apple Just Announced a Groundbreaking iPhone, but It Has Alienated a Key Market

Apple (NASDAQ:AAPL) recently unveiled its latest smartphone lineup, and it finally entered the fast-growing foldable smartphone market by launching the iPhone Duo.

The iPhone Duo is a landmark product for Apple, representing a major redesign of the company's flagship. Additionally, Apple launched the iPhone 18 Pro models along with the Duo, and as expected, it increased the prices of all its smartphones.

Higher component costs, especially memory chips, are behind the increase in iPhone prices. It is worth noting that Apple has also raised prices on its older models to pass higher input costs on to customers. However, the price hikes have been quite severe in one key market that could move the needle for the company in a big way over the long run -- India.

Let's take a closer look at Apple's pricing strategy in India and examine why steep price hikes there could alienate a large customer base.

Image source: The Motley Fool.

Apple has been growing steadily in India, but the price hikes will pose a challenge

Apple's India revenue reportedly exceeded $10 billion in the previous fiscal year that ended in March 2026, according to Bloomberg. That was higher than the $9 billion in sales the company generated from this market in the preceding year. The double-digit growth in Apple's revenue in India is impressive, given that the Indian smartphone market is weakening due to higher prices.

Market research firm IDC reports that Indian smartphone shipments fell 7.9% year over year in the first half of 2026. However, the market's revenue was up by 3.6%, driven by a higher average selling price (ASP). Specifically, smartphone ASP in India increased by 14.4% year over year to $315 in the first half of the year, driven by a shift toward premium smartphones.

So, it may seem that Indian consumers will be willing to pay higher prices for Apple's latest smartphones. But the problem is that the price hikes in India are significantly higher than in the U.S. The iPhone 18 Pro, for instance, has been launched at 164,900 Indian rupees (INR) for the base 256 GB variant. That's equal to $1,725 at the current exchange rate, or 44% higher than the price of the same variant in the U.S.

What's more, the price of the older iPhone 17 has been hiked by 21% to $1,045. So, Indian customers who would have ideally preferred purchasing older iPhones will now have to pay significantly more. Even the iPhone 17e, which is Apple's cheapest iPhone on sale in India, is now priced at $836 for the base variant. These price hikes can be attributed to import duties and taxes on components.

So, the price of the most accessible iPhone model is significantly higher than India's smartphone ASP, and that could push potential customers toward Apple's competitors. Meanwhile, the flagship iPhone Duo starts at just over $3,100 in the Indian market. For a country with a GDP per capita (purchasing power parity) of $12,800, according to the International Monetary Fund, that's a lot of money for a phone.

As such, Apple's pricing in India could come in the way of the company's growth in a country where the smartphone market is anticipated to clock an annual growth rate of 10.5% through 2030, according to Maximize Market Research. The firm estimates that the market could exceed $341 billion by the end of the decade. So, Apple could miss out on capitalizing on a steadily growing market due to price hikes, but it has no other way out, as the company needs to preserve margins.

The bigger picture seems bright

Apple has generated $467 billion in revenue over the trailing twelve months. India, therefore, is a very small market for Apple right now. Of course, there is strong growth potential in the Indian smartphone market, and Apple may be missing out on it right now. However, the good part is that the Indian economy is growing at a brisk pace, clocking 7.8% growth in the previous quarter.

So, Apple could eventually gain traction in India amid an improvement in the country's spending power. Moreover, Apple's entry into the foldables market opens a new opportunity. Counterpoint Research estimates that the foldables market could grow by 37% next year, with Apple playing a central role in its growth.

The firm estimates that Apple could corner a quarter of this fast-growing niche in 2026, becoming the second-largest player in the foldable smartphone market. So, Apple's growth rate could pick up in the future, and that could translate into more upside for this tech stock. It is worth noting that analysts have hiked their long-term earnings-per-share growth expectations for Apple following its latest report.

AAPL EPS LT Growth Estimates data by YCharts

An acceleration in the company's growth will help Apple stock sustain its healthy momentum. Shares of the company are up by 32% over the past six months, and there is a good chance that they will head higher following the launch of the latest iPhones that now command stronger pricing.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.