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Price war breaks out between Apple and Samsung in India - Page 2

post #41 of 81
Quote:
Originally Posted by igriv View Post

Quote:
Originally Posted by Adrayven View Post

It's $650 US, but the import tax to india has been killing it's pricing. They were building some facilities w/foxcon there I understand to get around the import tax.. 

 

Doesn't Samsung have to deal with the same problem, or do they have factories in India?

Excellent point. They don't have factories in India.

 

(See, I can be reasonable..... 1wink.gif)

post #42 of 81
Quote:
Originally Posted by Apple ][ View Post

(1) Not at all. We're talking business here, not charity. And it is foolish to try and go after customers who have no money. At some point, you just have to draw a line in the sand.

 

(2) That depends. Look at Apple's stock price. People keep talking about Apple's shrinking margins. Do you think that those margins will continue to shrink or will they grow if Apple keeps making things cheaper?

you mean 'selling' things cheaper.

They cost the same to make.

They cost more to distribute in india.

Yet in a pricing war they are dropping their price.

 

 

All in all, the company with the the higher net margin wins.  Apple, starting with the largest gross margin, and assuming all costs are the same for both parties can make a little bit more if it discounts to the same price as Samsung.   

 

Apple just has to make the net cost in India+shipping abroad doesn't make for a grey market vacuum.   Assuming the required middlemen, this is unlikely.   So, in all, Apple discounting to improve the perceived value (not to compete with the $50 crap phones, but to maintain the 'most valuable high end' phone), is a long term win for Apple.

post #43 of 81
Quote:
Originally Posted by iObserve View Post

RichL clearly doesn't understand that the market in India is fundamentally different than the U.S.. Foreign companies are not allowed to own stores or sell merchandise directly .... etc. etc.

If anyone doesn't understand the market, it's you.

 

Single-brand retailing has been allowed for a long time in India. You really should educate yourself a bit before spouting off.

post #44 of 81
Quote:
Originally Posted by SolipsismX View Post

Quote:
Originally Posted by Apple ][ View Post

(1) Not at all. We're talking business here, not charity. And it is foolish to try and go after customers who have no money. At some point, you just have to draw a line in the sand.

Telling people to "take a hike" because they are poor doesn't sound businessy to me.

I disagree. It is very businessy to not only know who your customers are, but who they're not.

 

Apple has never tried to to be everything to everybody, and I see no particular reason for them to start to abandon that strategy in places like India or China. Leave it to the others. 

post #45 of 81
Quote:
Originally Posted by igriv View Post

 

(1) is myopic. Poor people (and especially their kids) will not always be poor, and if they grow up with Android phones, that's what they will keep using.

 

 

(2) Cheaper products frequently have much higher margins.

1) Really!? Did you parents use all Apple products (since you claim to be a big Apple user)? 

 

2) Really!? Examples? (Not exceptions, but the "frequent" ones).

post #46 of 81
Quote:
Originally Posted by Mac_128 View Post


Wow, have you applied to be the CEO of Apple? Because they are obviously really in need of your expertise.

You seem to be making the same mistake that somebody else did a few days ago on this forum. I have never once claimed that I'd be a good CEO of Apple. As a matter of fact, I would be a terrible CEO of Apple, and I can easily admit that.

 

And this is not about criticizing Apple, because Apple hasn't released any cheap phone to date, and they have not hinted that there are any plans to do so. The ones who are whining about cheap phones, such as the analysts and others are those who think that they know better than Apple. And guess what, those clueless people wouldn't make good CEO's of Apple either. They'd run Apple in the ground so fast, that it would make RIM's downfall look good in comparison.

post #47 of 81
Quote:
Originally Posted by TheOtherGeoff View Post

All in all, the company with the the higher net margin wins.  Apple, starting with the largest gross margin, and assuming all costs are the same for both parties can make a little bit more if it discounts to the same price as Samsung.   

 

I'm not sure you meant that the way it came out, or at least in the way that I read it.  

 

If the costs are the same and they both discount to the same price, then they will both have the same net profit.

 

Apple's high gross margin is mostly because of its high prices.

 

Both get good deals on components.  In fact, Samsung recently took over Apple's spot as the largest consumer of electronic components in the world.  After all, Samsung makes twice as many smartphones and four times as many phones, as Apple.   Samsung's other divisions also make memory and CPUs, and hopefully the Mobile division gets some discount for buying from corporate (but maybe not).

 

Manufacturing costs might be slightly higher for Samsung when it comes to top of the line smartphones, which are made in Korea itself to ensure better quality.  (Lower level phones are made in other countries.)

post #48 of 81
Quote:
Originally Posted by dasanman69 View Post


Do you really think that Macs are a big source of income for Apple, their bread and butter since 2007 is the iPhone.

Bigger source of income than THE OTHER TOP 5 PC MANUFACTURERS, COMBINED;-).

 

(source Asymco http://www.asymco.com/wp-content/uploads/2013/04/Screen-Shot-2013-04-16-at-4-16-4.05.57-PM.png)

 

<----THIS corner here!!!!

 

 

So, while not a big source of income relative to the iPhone, it's huge in the industry, and provides the current core base for the Apple Ecosystem (how do you burn CDs onto your iPhone?).

 

In 5 years the Mac may not be that important... as iCloud becomes the 'backend' for all iOS services, and the iTunes/Mac umbilical becomes a historical footnote.

Today, however, 4-6Billion a year in PROFITS on 22B in sales is not too shabby.

 

Yes, the iPhone is on the vanguard, but the Mac is holding it's flank quite well.

post #49 of 81
Quote:
Originally Posted by igriv View Post

Quote:
Originally Posted by anantksundaram View Post

1) Really!? Did you parents use all Apple products (since you claim to be a big Apple user)? 

 

2) Really!? Examples? (Not exceptions, but the "frequent" ones).

1. And your point is? My parents used pen, paper, books printed on paper and occasionally telephones with a big spirally cord. I suspect yours did too. My taste in books is probably somewhat influenced by theirs, as for technology, since we grew up in a vacuum, we filled it ourselves (in my case, I used just about every computing technology that was, from IBM mainframes, to every possible apple device, to android devices, to windows PCs and phones -- I am lucky enough to be able to afford to try things out).  People (in India or elsewhere) all of whose friends have Android phones will probably buy such a phone when they can. Maybe they will buy an iPhone as a status symbol. And maybe not.

 

2. What do you not consider exceptional? Aside from Apple last-years model, such things as fountain soda and greeting cards are considered common and have enormous markups. Cheap clothing does, too. I assume you know all this.

OK, let's leave both our sets of parents out of it (since, I guess, they were not computer users). Any evidence to back up the sweeping claim that "kids growing up using Android phones (or like products) will keep using Android phones (or like products)"? Or did you just make it up on the fly, like you seem to do a lot?

 

What are the margins on "fountain soda", "greeting cards", and "cheap clothing"? How does it compare to, say, margins that Apple currently has? Or, did you just make that up on the fly as well, like you seem to have done above?

 

Post first, think later?

post #50 of 81
Quote:
Originally Posted by igriv View Post

Believe it or not, I actually checked the margins on soda and greeting cards before posting -- they  are between 200 and 600%. Margin on Starbucks coffee is about 400%.

Can you provide some actual cites? Or links? What 'margins'?

post #51 of 81
Quote:
Originally Posted by igriv View Post

 

As for kids and android, I have plenty of evidence on computer use (from much student interaction), less for phone use (the poor kids all have android phones, actually, and this is becoming a bit of a class pride thing). I know that my son is an adept iDevice user at five years old, and if this goes on, there will not be much choice of what kind of phone to get him. Inertia is a powerful force.

OK, on this one, you're basically saying that your personal experience, and "inertia" as a "powerful source" say so. Cool. Very persuasive.

post #52 of 81
Quote:
Originally Posted by KDarling View Post

 

Sales are further apart, with Samsung over 33% share vs. Apple under 5%.

 

 

Samsung just dropped the Grand price in India to 19,500 rupees.

 

Found a site that calculates import duty and sure enough, it all adds up for the $640 iPhone:

 

Rs. 34,500 base price + Rs. 11,000 import duty = 45,500 rupees

 

 

Working backward, the Samsung Grand must have a base price of Rs. 15,000 ($280) in order to hit Rs. 19,500.


Nice info but import duty is levied on the cost price of the device, not the American selling price. So the import duty is much lesser than Rs. 11000.

 

Everyone is comparing the Indian price to $650. Note The Indian price is inclusive of all taxes. American price is $650 + local taxes.

post #53 of 81

http://www.toptenz.net/top-10-biggest-price-markups.php

 

Even though the data was from 2010

Quote:
Originally Posted by anantksundaram View Post

Can you provide some actual cites? Or links? What 'margins'?

post #54 of 81
Quote:
Originally Posted by TheOtherGeoff View Post

how do you burn CDs onto your iPhone?

The same way you plug in your iPhone to a landline or wired Ethernet... You don't.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #55 of 81
Why is the iPhone 5 price compared to the Galaxy Grand?

The Grand is a mid range phone with most of the high end features stripped out in order to make it cheap.

The price comparison should be based on the iPhone 4, for the iPhone 5 the price should be compared to the Galaxy S III.

Evidence of bias in the source of this article, done purely to make Apple look more expensive.

Galaxy Note 2 Rs.37380, Galaxy S III Rs. 30950

Source
Edited by hill60 - 4/17/13 at 1:14am
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post #56 of 81
Quote:
Originally Posted by Lerxt View Post

Apple is falling into the same trap it did in Australia and other places with pricing where they rip off the public by charging more than they do in the US. This is terrible customer relations as everyone knows and are really offended by it. This is the reason also why everyone outside the US has a US iTunes account.

iPhones cost less on plans in Australia than they do in America.

iPhone 4 free on a $30 plan, iPhone 5 16GB $6 pm on a $60 plan
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post #57 of 81
While there are some ridiculously wealthy people in India there is a whole spectrum including those who that struggle to afford the most basic of handsets. The nokia phone I owned prior to my iPhone was a very basic candybar Nokia that supported a bicycle charger for markets where the customer might not have access to mains electricity.

It will be interesting to see what impact a budget-oriented iPhone can make (if any). You either have to seek volume, values, or valued customers. While I'm quite happy with apple focussing on providing a premium experience there is a great deal of room for movement. The question is how to provide a spectrum of experiences that both meet the needs of low-end customers but also provide incentive for customers to opt for products associated with higher profit margins.
post #58 of 81

Maybe a day late and a dollar short, but I just wanted to comment on this thread. As with every other place, there are uber-rich, rich, middle class and poor people in India. However, being as populous as India is, the numbers in each section are huge.

 

Leaving aside the rich, so far the upper-middle class could afford an Apple product (and I'm not talking about iPods). However, ever since Apple tied up with a new distribution partner, widespread ads for the iPhone, coupled with instalment plans and trade-ins means that Apple is now bringing people from the lower-middle class into their target market.

 

So now, you have people from 3 different economic sections that can afford an iPhone in India - the super-rich, the rich and the middle-class. This means that, contrary to what Apple][ thinks, Apple does have a big potential market here. Apple knows this and I am sure they are doing everything possible to dig their heels in here.

post #59 of 81
With all due respect to you Author and content of this post, I feel he must pay close attention to the information. Apple's iPhone 4 7,000 discount offer expired on 14th April 2013 while Samsung is the only one which is offering 15% discount but only on Credit Card users in a country where CC penetration is less than 1%.
post #60 of 81
Quote:
Originally Posted by Dunks View Post

While there are some ridiculously wealthy people in India there is a whole spectrum including those who that struggle to afford the most basic of handsets. The nokia phone I owned prior to my iPhone was a very basic candybar Nokia that supported a bicycle charger for markets where the customer might not have access to mains electricity.

It will be interesting to see what impact a budget-oriented iPhone can make (if any). You either have to seek volume, values, or valued customers. While I'm quite happy with apple focussing on providing a premium experience there is a great deal of room for movement. The question is how to provide a spectrum of experiences that both meet the needs of low-end customers but also provide incentive for customers to opt for products associated with higher profit margins.

India has a lot of billionaires who don't mind spending money:-

http://www.simplyweddings.com/wedding/Newsworthy/General/content/Steel-tycoons-daughter-60-million-wedding/1163.htm
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post #61 of 81
Very Interesting yet another Apple Vs. Samsung sales squabble. After doing a bit of research my opinion is as follows.
Apple must lower their prices for products sold in India. As I understand it any Apple product, an example the iPhone has a massive(30-35%) cost over US sales prices, there was in fact an internet campaign of some sorts by their countries youth regarding the same, This must change. Additionally If true, the rumoured low cost iPhone should do wonders for Apples sales in this country. The Indians have shown they have quite an appetite for Apple products but will only buy if it makes sense financially & at the time it doesn't.
post #62 of 81
Quote:
Originally Posted by BestKeptSecret View Post

Maybe a day late and a dollar short, but I just wanted to comment on this thread. As with every other place, there are uber-rich, rich, middle class and poor people in India. However, being as populous as India is, the numbers in each section are huge.

 

Leaving aside the rich, so far the upper-middle class could afford an Apple product (and I'm not talking about iPods). However, ever since Apple tied up with a new distribution partner, widespread ads for the iPhone, coupled with instalment plans and trade-ins means that Apple is now bringing people from the lower-middle class into their target market.

 

So now, you have people from 3 different economic sections that can afford an iPhone in India - the super-rich, the rich and the middle-class. This means that, contrary to what Apple][ thinks, Apple does have a big potential market here. Apple knows this and I am sure they are doing everything possible to dig their heels in here.


I disagree about India having huge number of 'rich' people. Only 16 million people belong to a household that makes $35k a year. Corresponding US figure is over 160 million people.

http://blog.shunya.net/.a/6a00d8341dd33453ef0147e3b81a02970b-pi

 

http://www.openthemagazine.com/article/business/the-wealth-report

post #63 of 81
Quote:
Originally Posted by Richard Getz View Post

Maybe the people in India need to go to their carriers and complain that they don't subsidize the phone.  


Subsidies are an awful model for the customer, in the end...

Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

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post #64 of 81
Quote:
Originally Posted by dasanman69 View Post


And Apple can't afford to let the competition get entrenched in such a huge market.


Ridiculous. Let them get entrenched, quality sells itself.

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post #65 of 81
Quote:
Originally Posted by arch View Post


I disagree about India having huge number of 'rich' people. Only 16 million people belong to a household that makes $35k a year. Corresponding US figure is over 160 million people.

http://blog.shunya.net/.a/6a00d8341dd33453ef0147e3b81a02970b-pi

 

http://www.openthemagazine.com/article/business/the-wealth-report


But does that take into account cost of living differences?  I suspect US$35K will buy you a lot more in India than in the US - excepting Apple products of course.

post #66 of 81
Quote:
Originally Posted by dasanman69 View Post


Are you suggesting not one single Indian can afford a iPhone? With 1 billion people chances are that Apple can sell as many iPhones in India as they do in small countries.

 

This gentleman might just possibly be able to afford an iPhone:

 

 

But perhaps not quite as easily as he could few days ago.

post #67 of 81

Even the Galaxy Grand at over $300 is a heck of a lot of money in India.

post #68 of 81
Quote:
Originally Posted by dasanman69 View Post

And Apple can't afford to let the competition get entrenched in such a huge market.

The "competition" is selling Android phones for $150 in India where an iPhone costs 4 times as much.

Apple doesn't sell cheap pieces of garbage just because the other guys sell more.

See the computer market... where Apple's laptops start at $1000 (for an 11" laptop!)

.
Edited by Michael Scrip - 4/17/13 at 3:59am
post #69 of 81
Quote:
Originally Posted by Michael Scrip View Post

The "competition" is selling Android phones for $150 in India where an iPhone costs 4 times as much.

Apple doesn't sell cheap pieces of garbage just because the other guys sell more.

See the computer market... where Apple's laptops start at $1000 (for an 11" laptop!)

.

Yes but what's more likely, someone with a cheap Android phone upgrades to a high end Android phone or to the iPhone?
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post #70 of 81
Quote:
Originally Posted by aBeliefSystem View Post

Even the Galaxy Grand at over $300 is a heck of a lot of money in India.

 

Exactly.  What the headline is incorrect about, is the idea that Samsung is reacting to Apple.  They're not.  At the iPhone's high prices and relatively low sales volumes, Apple is not even close to being Samsung's main competition in India.

 

Samsung is lowering prices to compete with the local India phone makers Karbonn and Micromax.  Those companies sell Android smartphones starting at ~$65, which is important for the overwhelming majority (~800 million) of Indians who make less than $2 a day.

 

The chief of Micromax thinks they can overtake Samsung by this time next year.


Edited by KDarling - 4/17/13 at 4:51am
post #71 of 81
Quote:
Originally Posted by igriv View Post

Check this out: http://www.statista.com/topics/870/iphone/#chapter3
 It seems to indicate that Apple's manufacturing price for the iPhone 5 is around $250. I would estimate that the iPhone 4 is about a third of that (correct me if I am wrong -- I could not find the costs). So, import tax or no, apple is protecting its margins before market share. As usual.

Manufacturing cost is not total cost. For instance, Apple has to pay for research, services, intellectual property licensing, legal defense, shipping, and marketing.
post #72 of 81
Quote:
Originally Posted by dasanman69 View Post

Yes but what's more likely, someone with a cheap Android phone upgrades to a high end Android phone or to the iPhone?

What are you suggesting... once you use Android, you'll always use Android?

I dunno... people don't seem to get too invested in the Android ecosystem. So apps won't hold them to Android.

So what else will? I'm not seeing any reason that would make a person stick to Android.

In other words... it would be rather easy to switch from a cheap Samsung Galaxy Y to a more expensive Apple iPhone if they could afford to.

I understand what you're saying... but I don't think Android is as sticky as you think it is.

If you've been using a cheap Samsung Galaxy Y with a 320x240 screen and Gingerbread... and you finally can afford a more expensive phone... then yeah there are quite a few better phones to choose from.

But I'm just not seeing why someone would be more likely to choose a new Android phone just because their last phone was an Android phone.

In your last comment you said India is getting "entrenched" by Android.

That may be true to a point... but you're forgetting that Android is the only choice at certain price ranges. When someone only has $150 to spend... Android phones just happen to be the only smartphones in that price range.

When someone has $450 or more... there is a much better selection of Android phones and iPhones.

But again... I'm not seeing why having a cheap Android phone now would make them more likely to choose another Android phone later.
post #73 of 81
Quote:
Originally Posted by bleh1234 View Post

http://www.toptenz.net/top-10-biggest-price-markups.php

 

Even though the data was from 2010

Quote:
Originally Posted by anantksundaram View Post

Can you provide some actual cites? Or links? What 'margins'?

Really? In what bizarro world is a 'markup' worth anything? What "margin" is this, and what is it worth?

post #74 of 81
Quote:
Originally Posted by cnocbui View Post

But perhaps not quite as easily as he could few days ago.

LOL!

post #75 of 81
Quote:
Originally Posted by Michael Scrip View Post

What are you suggesting... once you use Android, you'll always use Android?

I dunno... people don't seem to get too invested in the Android ecosystem. So apps won't hold them to Android.

So what else will? I'm not seeing any reason that would make a person stick to Android.

In other words... it would be rather easy to switch from a cheap Samsung Galaxy Y to a more expensive Apple iPhone if they could afford to.

I understand what you're saying... but I don't think Android is as sticky as you think it is.

If you've been using a cheap Samsung Galaxy Y with a 320x240 screen and Gingerbread... and you finally can afford a more expensive phone... then yeah there are quite a few better phones to choose from.

But I'm just not seeing why someone would be more likely to choose a new Android phone just because their last phone was an Android phone.

In your last comment you said India is getting "entrenched" by Android.

That may be true to a point... but you're forgetting that Android is the only choice at certain price ranges. When someone only has $150 to spend... Android phones just happen to be the only smartphones in that price range.

When someone has $450 or more... there is a much better selection of Android phones and iPhones.

But again... I'm not seeing why having a cheap Android phone now would make them more likely to choose another Android phone later.

I would attest it more to a person's nature to stay with what they know. Say a Indian has finally saved enough money to buy a high end smartphone and walks into a store a month from now and is presented a 7 month old iPhone 5 and a just released HTC One running the latest version of Android which is a vast improvement over Gingerbread which one do you think they'll be most likely to choose? Yes many will choose the iPhone but as Android the OS gets better and as manufacturer's build quality improves thennumber choosing the iPhone will decrease.
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post #76 of 81
Quote:
Originally Posted by dasanman69 View Post

Say a Indian has finally saved enough money to buy a high end smartphone .... which one do you think they'll be most likely to choose? 

Total cost of ownership -- including resale value -- is hugely important in a country like India.

 

I'd be curious to know the resale prices for equivalent Apple v. Android phones in India (we know what they are in the US).

post #77 of 81
Quote:
Originally Posted by anantksundaram View Post

Total cost of ownership -- including resale value -- is hugely important in a country like India.

I'd be curious to know the resale prices for equivalent Apple v. Android phones in India (we know what they are in the US).

That has been a huge advantage of iPhones but it's becoming less of one as of late.
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post #78 of 81
Quote:
Originally Posted by Michael Scrip View Post


The "competition" is selling Android phones for $150 in India where an iPhone costs 4 times as much.

Apple doesn't sell cheap pieces of garbage just because the other guys sell more.

See the computer market... where Apple's laptops start at $1000 (for an 11" laptop!)

.

 

The "competition" starts at Rs.3850 ($71).

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post #79 of 81
Quote:
Originally Posted by dasanman69 View Post

I would attest it more to a person's nature to stay with what they know. Say a Indian has finally saved enough money to buy a high end smartphone and walks into a store a month from now and is presented a 7 month old iPhone 5 and a just released HTC One running the latest version of Android which is a vast improvement over Gingerbread which one do you think they'll be most likely to choose? Yes many will choose the iPhone but as Android the OS gets better and as manufacturer's build quality improves thennumber choosing the iPhone will decrease.

I don't know how Indian people do it... but I've seen people in the US who have gone from Blackberries to iPhones and from Android phones to iPhones.

Switching platforms isn't as difficult as you think it is... especially if you don't have a ton of paid Android apps holding you back.

iPhones are easy to use too... that should alleviate some fears.
post #80 of 81
Quote:
Originally Posted by hill60 View Post

The "competition" starts at Rs.3850 ($71).

Ah... very true.

And people wonder why "Android is winning the market share race"

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