With Apple’s ambitious expansion program in China well underway, the company now appears to be seeking to boost its market share in the next growth market, India. CNET reports that Apple has almost halved the price of the iPhone 5s from 44,500 Rupees ($665) to 25,000 Rupees ($370).
The price cut appears to be a move by the Californian company to increase its penetration in India, the world’s third largest smartphone market after China and the USA, where the bulk of phones sold are sub-$300. As of quarter 3 of 2015, Apple is not even among the top 5 smartphone vendors in India, a market that IDC Research predicts will overtake the US by 2017.
Although India is a huge market for smartphones, it is currently quite a different market to China, suggesting that Apple needs a significantly different approach …
China has a large and growing middle-class in urban areas, who can afford premium products. India, in contrast, has a much smaller market for premium products as yet, with the greatest opportunity in the mid-range.
“To drive volume, Apple will need to keep focus on older iPhone generations,” IDC’s Kiranjeet Kaur said
Apple is also hampered by the high import taxes India applies to products not manufactured in the country. Samsung is able to sell its products at more competitive prices thanks to local manufacturing.
It was announced in the summer that Foxconn planned to build 10-12 factories in India by 2020, though it was not known whether production would include iPhones. Tim Cook discussed the possibility of local manufacturing with Indian Prime Minister Narendra Modi in September.
Apple has been working hard to grow sales in India with a large boost to its reseller network, financing plans and cheaper hardware. The company has also been in discussion with the Indian government about relaxing laws which prevent it opening its own retail stores in the country.
The move may also be an attempt to move iPhone 5s inventory ahead of the launch of the iPhone 6c which is rumored for release in Spring.
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