Apple price cut on iPhone 5s in India marks a new strategy for developing markets

Apple is well on the way to capturing a larger percentage of smartphone sales in China, but has yet to do well in its next market for huge growth -- India. CNET reported that Apple has slashed the price of the iPhone 5s in India from 44,500 Rupees (about $665) to 25,000 ($370) in an attempt to make inroads into the smartphone market in that country.

Apple's never been known to cut prices on product so drastically, so this is a new strategy to capture market share in India. Most smartphones in India are sold for less than $300, which explains why Apple's not even on the list of top 5 smartphone vendors in the country. IDC Research believes that India will overtake the US in size as a smartphone market by 2017, making it critical for Apple to crack the market... and soon.

While China has a large and expanding middle class that can afford premium products, India has a much smaller market for that product segment. IDC's Kiranjeet Kaur said that "To drive volume, Apple will need to keep focus on older iPhone generations."

Apple's products are also subject to high import taxes since its product line isn't manufactured in India. Samsung uses local manufacturing, which allows it to sell its products at much more competitive prices. During the summer of 2015, it was noted that Apple manufacturing partner Foxconn had plans to build up to a dozen factories in India by 2020, although the details of who Foxconn would be building devices for was not disclosed. 

Apple is working in other ways to try improving iPhone sales in India by adding a large number of new partners to its reseller networking, offering cheaper hardware, and creating financing plans. Tim Cook and other Apple executives have been in discussions with the Indian government about local manufacturing and relaxing laws that keep Apple Stores from being opened in the country. 

There's also some talk that Apple might be using the price cut in India to help move inventory of the iPhone 5s before releasing a rumored new less-expensive "iPhone 6c" early next year.