Apple and Samsung locked in smartphone price war in India – or are they?

“Samsung Electronics Co. and Apple Inc. are battling it out globally for smartphone dominance. In India, they are trying to outdo one another by offering various discounts to convince consumers to switch smartphones,” Dhanya Ann Thoppil reports for The Wall Street Journal.

“Apple launched a scheme in early April that allows consumers to exchange any of their older smartphones—whether it be an iPhone, an Android-based phone or a Blackberry– for a cash discount of at least 7,000 rupees ($128) on the purchase of an iPhone 4, the basic model available in India,” Thoppil reports. “Shortly after on April 10, South Korean rival Samsung said it would offer a 15% cash back to consumers who purchase its smartphones including the Galaxy Note II, Galaxy S III, Galaxy Grand, and the Galaxy tablet… Samsung’s promotion is on top of a previous offer that allows customers to buy any of these devices through a 12-month interest-free payment plan.”

“Over the past year, Apple has been trying to grab a greater share of the smartphone market in India by overhauling its iPhone operations, offering interest-free loans to lure more customers and aggressively marketing its phones,” Thoppil reports. “In September, Apple started working directly with two specialized technology products distributors to get its phones across to retail outlets.”

Thoppil reports, “Some analysts say Apple’s move is aimed more at clearing out stocks of its three-year old, outdated model of the iPhone. ‘iPhone 4 is a product that will be phased out over the next one or two years considering the shelf life of a typical Apple product,’ said G. Rajeev, an analyst tracking the mobile phone market in India.”

Read more in the full article here.

MacDailyNews Take: Clearing inventory is not entering into a “price war.”

And market share (uni share) is but one metric to assess “dominance,” and not the most important one by a long shot.

17 Comments

  1. Interesting… I guess we will see how deep Samsung’s pockets are. 15% discount on an already sold product that is not generating a residual profit on apps or on usage because Samsung is not a Telco nor do we know if they have an agreement with Telco’s to receive payment for attracting new customers through their products in the way that Apple inc. does.
    Whether or not Apple inc. is trying to clear inventory, the by product of this exercise will increase the number of paying customers to Telco’s as well as to Apple inc. through iTunes and the App Store, not forgetting the ever bulging PassBook. The by product to Samsung? lost revenue increasing from every sale! Which model is the No-Brainer?

  2. I forgot to mention that the people of India are no mugs, what is to stop them from buying both? iPhone 4 for parents, Samsung with 15% discount plus interest free credit for their kids!

  3. Apple cannot turn a blind eye to market-share. It would be a replay of the 90’s.
    Not saying to undercut it’s product’s margins, just that market share matters. Ask MS, ask Google, ask Blackberry.
    You could be at the top one moment, and under an avalanche the next in the blink of an eye.

    1. I just asked Lamborghini about how important market share was in the automotive industry and they said that they were shaking in their boots with worry that Hyundai would run them out of business.

      1. A specious analogy that makes iPhone users feel like they’re part of some elite class of people that buy excessively expensive merchandise.

        Good one.

        Market share is very important to reach the scale where you can change/turn around entire industries. Lamborghini-type market share doesn’t change the world, it just makes a few wealthy people feel better about themselves for a few moments.

      2. Really? Do Lamborghinis drive on proprietary roads and gasoline that are not supported by the current infrastructure?
        Apple is alive today ONLY because it created a new product, their old Lamborghini was not sustainable without a large enough customer base.

    2. @MDN, @RP
      One advantage of a decent market share is MINDSHARE. You’ve got to see enough of them to buy more.
      Buying an iPhone should be a “safe bet” wrt your employer/environment, just like many IBM PCs were bought instead of PC-DOS compatibles “because you couldn’t go wrong” that way.

    3. Therefore Apple should ask itself: what could offset Apple against Samdung et al, so that everyone wants an iPhone over a me-too phone. Quality alone won’t cut it. I know several price conscious buyers who compare features and will buy non-Apple stuff if the price differential doesn’t look like it compensates to superior quality.
      Indeed, Apple hesitates to list features, but a careful reader of their specs should become aware of the areas where they blow away the competition (think software features too).
      Apple made the mistake once of pricing themselves out of the market when it lost badly in the battle between the early Macintoshes and PC-DOS compatibles (At a time they basically owned the world with their Apple ][ ).
      Don’t tell me that this approach yielded them the greatest earnings of the industry back then. If the overpricing is too extreme, sales will decline as the general price level gets lower (call it the elasticity of prices, which is highly non-linear at this end of the price scale).

  4. Folks, it’s this simple:

    If you want a cheap knockoff, for whatever reason, you get the Samsung POS.

    If you want the real thing from the people who actually INVENTED IT, you get the Apple gem.

    Let the sales fall where they may. That’s the situation.

    Yes, as ever Samsung, FSCK -U. Enjoy your ill gotten gains. 😛

  5. As RP said, in order to beat your rivals in any business, you don’t follow rules of fair play. South Koreans don’t believe in that sort of stuff. S. Koreans pound their rivals until they can’t get up anymore. Apple needs to take its white gloves off and put on some brass knuckles. Make Samsung wish they’d never gotten into the smartphone business. Samsung will do everything and anything to take all of Apple’s iPhone market share away. That’s how the chaebols operate. That’s how Wall Street expects companies to operate. Apple’s value will remain low unless the company becomes far more aggressive with rivals. Allowing other companies to easily steal your market share is a no-no in the eyes of investors.

    As far as comparing Lamborghini’s to iPhones, you can’t really do that because Wall Street doesn’t see iPhones as Lamborghinis. To Wall Street, an iPhone is no better than a high-end Kia and an over-priced one at that. I’m saying this because when the BlackBerry was dominating, RIMM had a rather high company valuation but Apple has no such thing. All I know is Apple’s situation is very odd indeed but then it probably comes down to that not having major market share “problem”.

    1. That is how Wall Street expected Microsoft to operate. Where is Microsoft now? Why follow advice from people who don’t know how to create business’s but are versed in how to destroy business’s by taking them over, breaking up the business to sell it as several small companies that never succeed because they no longer have the critical size to lower their operating costs through volume purchasing of base materials or components. If I were in business and followed your advice, I would deserve to fail miserably.

  6. Where are the Netbooks now they were small and very cheap and everybody should have opted for the cheap option so why are they not around anymore? How are the macs doing now? still more expensive then PC’s i hear and yet apple is making profit unlike the pc industry. someone said this(Apple made the mistake once of pricing themselves out of the market) Maybe We should learn something from this. Whose time line are we following? Name me one phone that came out with a killer feature in the last few months. Apple never followed anybody not wall street, not analyst especially not you and me. They do their talking with their products. They always did and there will always be a competitor, htc few years back samsung now whoever next. Should they press the panic button every time someone comes along? We still have macs don’t we, and we are enjoying using them more than ever before so why are you worried?

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