Apple and Samsung are battling it out toe to toe in India, reports the Wall Street Journal. They're trying to outdo one another by offering various discounts to convince consumers to switch smartphones. Apple launched a promotion in early April that allows consumers to exchange any of their older smartphones—whether it's an iPhone, an Android-based phone or a Blackberry– for a cash discount of at least $128 US on the purchase of a basic iPhone 4. In Q4 2012 Apple only held 5% market share in India in contrast to Samsung's 40%.
Apple's actions quickly stirred Samsung into responding with its own counter promotion offering a 15% cash-back to Indian consumers who purchase its smartphones and tablets. Samsung's latest promotion is over and above their standing offer of a 12-month interest free payment plan.
Apple launched their iTunes Store in India in December 2012. That move was quickly followed by another to sell 28 cent songs in India to drum up interest in the iTunes Store which in turn created more demand for Apple's handhelds. The results paid off quickly as sales in India tripled in a single quarter. The enthusiasm from these actions spilled over to reports that Apple would triple their footprint in India by 2015. Some analysts are now claiming that Apple could reach sales of $1 billion US in India this year.
Mr. Rajeev, an analyst tracking the mobile phone market in India, stated that for Apple to really grab a greater share of India's smartphone market, they'll have to do a lot more than discounting older iPhone 4 models. Most importantly, it needs to introduce a slew of phones across different price categories, like Samsung has.
While offering "a slew" of iPhone's at different price points is unlikely to materialize any time soon, if ever, it's been rumored since early January that a lower cost iPhone is on Apple's roadmap. In order to remain competitive with new competition from China, Apple will have to broaden their iPhone line-up for both China and Indian markets. Apple's aggressive marketing in India would suggest that such an iPhone is likely in the making.
The tradeoff for gaining more market share in India have some like Gene Munster concerned that a cheaper iPhone will eat away at Apple's higher end profits. But that's assuming that the design of the cheaper iPhone will be identical to the current iPhone with the exception of using plastic. That may or may not be the case at all. Apple could surprise the market with a pure nano-styled iPhone such as this patent shows or this alternative.
However it plays out, if Apple is to hit sales of $1 Billion US or more this year, it's going to have to show that they're willing to offer India's consumers a product that's more modern in order to excite sales.
At the end of the day, it's pretty clear that Apple is out to vastly improve their current 5% market share position in India. Battering away at Samsung's position is just a bonus.
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