iPhone 5 presser (Phil Schiller, iPhone family prices)

In another era, Apple and Samsung would be competing gasoline retailers, locked in a war to entice more automobiles to the pump. Update the picture to the 21st century, replace gas with smartphones and you have the modern-day equivalent of a price war playing out in India, according to a Wednesday report.

Android-based Samsung smartphones initially had the majority of the India market to itself. However, now Apple is shaking things up by offering discounts on its iPhone 4 – a move fueling the company’s challenge of rival Samsung.

The South Korean company has responded with discounts on its Galaxy family of products – on top of the current payment plan. Both companies are jockeying to control a market full of potential smartphone buyers…

Dhanya Ann Thoppil, writing for The Wall Street Journal:

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.

The promotions come as competition in India’s smartphone market is heating up with more consumers looking to replace basic handsets with phones that can offer Internet browsing, video, music and other features.

Samsung in the fourth quarter of 2012 led the 1.24 billion people market of India with a forty percent share, while Apple trailed with a meager five percent of smartphone sales in the country, according to market researcher Canalys.

To spur iPhone demand, Apple has made several adjustments to how it works in India.

In September of 2012, Apple began working directly with distributors to get the smartphone on retail shelves. Earlier in April, the company also unveiled cash discounts to make the iPhone 4 more affordable.

The moves appear to be working.

Shipments of iPhones to India tripled while the discounts “are already driving Apple’s sales in India,” according to today’s report.

iStore 002

As a result, Apple’s revenue is expected to reach $1 billion in 2013, up from $365 million reported for the fiscal year 2012, when ended in March.

But Samsung has not been idle.

On the heels of Apple’s discounts, the firm announced a fifteen percent cash back discount for its Galaxy smartphones and tablet.

This is on top of a 12-month interest free payments.

A Samsung Mobile in India vice president told the Journal “strong success” with the installment plan convinced the company to launch the fifteen percent cash back deal.

Samsung Apple India (The Next Web 001)
Image via The Next Web.

At the same time, analysts are questioning Apple’s decision to use the iPhone 4 as its flagship discount product in India.

One of the country’s mobile analysts said Apple will likely phase out the handset in the next year or two, prompting questions of whether Apple isn’t just dumping its aging products in India.

To wage a real price war with Samsung, Apple must follow its rival’s lead and offer several handsets spanning a spectrum of prices, giving hope to observers forecasting a new inexpensive iPhone could materialize.