An epic battle for control of consumer electronics hardware, software, and other content is raging right before our eyes. In just the last two years, Apple Inc. (Nasdaq: AAPL) and Samsung Electronics Co. Ltd. (Korea: SEC) have become dominant forces in the smartphone and tablet PC markets, and in my opinion, how the rivalry eventually plays out and the strategies used by the winner will be carefully analyzed in business schools over the next decade.
I won't say definitively that a single winner will emerge -- or when -- considering the turf war is about to spill over into the TV equipment and content market. This blog isn't to say either that other companies aren't competing as fiercely in the consumer electronics market. They are. Google and Microsoft are contenders and we cannot rule out HTC, Nokia, and Sony despite their current challenges in the mobile handset market. It's also likely that some other players could push competitors aside in only a few years in much the same way that Apple and Samsung emerged seemingly out of nowhere to eclipse once dominant handset players like Ericsson, Motorola Mobility, Nokia, and Research in Motion.
Yet, a cursory review of leading news items in recent weeks plus reports out of the 2013 Consumer Electronics Show confirm the story of the moment is the Apple vs. Samsung rivalry. It's also clear that Samsung has the edge in terms of the favorability of these articles. The headlines alone say it all. Here's a sampling:
The above headlines don't tell the full story. Apple is still one of the -- if not the -- world's most valued companies by market capitalization, but Samsung Electronics is clearly giving its North American rival a run for its money. Samsung isn't as profitable as Apple in the smartphone and tablet PC markets, but it is dominant in unit shipment of cellphones and advancing its share in the tablet segment. It is also one of the major contributors to the outstanding performance Google's Android operating system had in 2012, according to a news report. Of the almost 170 million mobile devices shipped in the third quarter of 2012, for example, about 72 percent had Android OS vs. 15 percent for Apple iOS.
Samsung, it seems, has the momentum on its side even though Apple is leading in terms of revenue growth rate and profits. The rivalry of these two companies and the ensuing competitive environment should hold a cautionary lesson for the electronics industry in that it shows the dangers involved in a supply chain pendulum that swings too far in support of one enterprise to the disadvantage of others.
Over the course of the last couple of years, many vendors and software developers have shifted their support services massively towards Apple, cleaving the market into two between Apple and "others." That move was myopic then and that remains so today. Apple remains a major player and is a leading consumer of semiconductors today. However, its status isn't set in stone, as demonstrated by Samsung's rising profile.
The industry tends to treat ascendant companies like Apple and Samsung like royalty, and I agree that they deserve the attention. However, this shouldn't stop suppliers, contractors, distributors, and other supply chain services providers from letting other customers know they are important to your operations, too. At the very least, don't make them feel like they deserve only leftovers.
Apple was (is?) our heartthrob. Today, Samsung is getting an admiring look. Which company will hold our fascination tomorrow, and will the supply chain be ready for it?
There's a lot to be said for being a premium product, and Apple has managed to keep that title to itself. People will buy Apple no matter how often new hardware comes out or how much it costs. Yet, Apple is moving down the price point with the mini and a less expsnsive smartphone. Samsung has always offered a range of products and prices to fit every budget. Even if it is not just Samsung Apple is following, the migration to more price-sensitive products is a significant move for Apple.
Wale, Samsung will have quite a run before being dethroned. It has a different strategy than Apple. It has numerous devices in the market, unlike Apple which sells the iPhone only. Samsung has many handsets and also uses several operating systems, which means customers -- rich or poor -- have options.
Of course, this strategy has its own weakness. It was once used by Nokia and the seeming lack of focus plus the challenge of supporting so many devices contributed to Nokia losing the top spot.
Anadvy, Correct. The flood of smartphones from rival companies is what is pushing prices down. Samsung, of course, is contributing to this but so are other vendors.
The adoption of the Tizen operating system is part of Samsung's strategy of going to market with various OS as opposed to sticking with one, which is preferred by Apple.
>>Isn't it true they need some software guy like Google with Android to make the phone interesting?<<
@t.alex, Samsung intends to lock the markets out against its rivals and hold to its keys. Already, the company's gaining its success with Andorid but staying ahead in competitive markets of mobile devices you need to spread your tentacles to a wider research areas especially in software, i think.
>>Samsung, it seems, has the momentum on its side even though Apple is leading in terms of revenue growth rate and profits<<
This happened years back when Apple was about to take the lead away from Nokia, eventually Nokia slipped and dethroned. And now, smarthpone consumers are resetting the market dominance - what's responsible for this, Software or Hardware? Considering the fact that world markets are littered with android based phones but Samsung stands out of them all.
A friend with Apple's phone a few months ago said iPhone is the best to my surprise, i saw this guy with a new smartphone - Samsung Note 2 weeks later. I asked why this time Samsung - "oh! i think Samsung is the best, my friend said.
Isn't it true they need some software guy like Google with Android to make the phone interesting?
@t.alex, one advantage of Tizen is that it is supported by Linux Foundation and the LiMo Foundation. Moreover HTML5 is used to make Tizen Apps and this has created lot of excitment among the developers. Needs to be seen if this can emerge as strong competitor to Android.
The most admirable contribution from Samsung is to keep price under control and bring it lower for common person.
@_hm, its not only Samsung but there are many other companies like HTC, LG, Sony which have released low-priced smartphones. I think one advantage that samsung has is, it has released costlier phones like Samsung-Note and it has also released low-priced phones like Samsung-galaxy. This helps samsung to capture the wider smartphone market.
but Samsung Electronics is clearly giving its North American rival a run for its money.
@Bolaji, I totally agree with your observation. Samsung is trying to capture the market by releasing wide variety of handsets to market. This diversity in the handset features, price is helping Samsung to capture the market wherease Apple has released limited varieties.
By moving to the core of the industry and offerings services that keep the system humming, a group within the electronics market has rendered irrelevant the question of ownership and control of the supply chain.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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