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?