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?
Bolaji, interesting story of the pawn shop. That is surprising! I should pay a visit to a pawnshop one day to see what's going on. Nevertheless there is still strong demand for 2nd hand Apple products like iPhones and iPads. People dump not only at pawn shop but also on Ebay too.
I think we won't see the end of Samsung or Apple that soon. The two are major players in the technology market and will probably continue to dominate the market for the next 3 years.
>>Samsung really understands what the consumers want in various markets and they are good in delivering them<<
I think you made a valid point! Apple has been focusing on high cost products for years, that's beginning to manifest between it and its close rival - samsung. Although, Apple's quality products can hardly be undermined but people at the bottom of pyramid earnings will often dictate the markets, even forever.
Samsung and Apple are the two major players today in the mobile devices market and that isn't likely to change in the next year or two. It takes time for a new competitor to build a following. People will definitely still be discussing the two companies one or more years from now.
Barbara, I listened recently to a program on NPR that in my opinion captures the challenge awaiting Apple in a few years. Analysts don't try to look that far ahead and many of them are enamored with Apple, of course, which makes them more focussed on singing its praise than on accurate analysis.
But, I digress. The NPR presenter told a story of how his young daughter wanted to know how to save money and increase her net worth. He advised her to take a trip to a pawn shop and avoid buying products there. He later visited a pawn shop himself and found that the majority of products there were Apple devices. These products ended up in this pawn shop because people dump old Apple devices as soon as a new one was released. They were keeping up with the Joneses! Of course, we could say this will continue for a long, long time but I personally don't think it will. Eventually, people will find either new Joneses to keep up with or just decide it ain't worth it keeping up with Apple's Joneses!
@Barbara, I am in fact purchasing a Mini with I5 and 500GB drive for $588.00. That is definitley a competitive price for the power and the software that Apple produces and is a good reason to have a cheap Apple Mini on hand. Would I get the Mini without the software applications in tow?....probably not. I also have a Samsung Smart LED 40" 3D TV that has a lot of third party apps, but Samsung does not control its app availabiltiy and therefore has to wait to introduce a better product based upon third party development and release to Samsung targeted operating systems. IN that sense, Apple has more control over its own destiny and may outlive Samsung in the AV and PC marketplace.
>>İ wonder if we will still be discussing Apple vs. Samsung a year from now.<<
Time will tell if Apple would be able to respond to it. Nokia - > Apple - > Samsung, after Samsung whose turn? Motorola, LG or still Apple? My bet on Motorola to come out stronger in near future and compete well in world markets.
İt is not putting is eggs in one basket which is a smart thing to do.
@Cryptoman, you are absolutely right. Samsung has done smart thing by releasing wide-variety of handsents. Samsung is also releasing some creative products like smasung is planning to release 3D camera called NX300. I am sure this innovation will help Samsung to capture bigger market share.
İ think the key advantage Samsung has is it offers many products addressing different markets. İt is not putting is eggs in one basket which is a smart thing to do. Although Samsung has a wide range of products, it is able to maintain a good level of quality for each one as well. İn terms of creativity, Samsung is also in good shape İ think. The last Samsung product İ have seen is a digital camera with Android OS and 3G on it. This combo allows you to instantly share your photos after you shoot them. Samsung really understands what the consumers want in various markets and they are good in delivering them.
Time will show how Apple will do with Steve Jobs' absence. The Apple products that keep the company going has Steve's genius built into them still and they still have some steam left in them. Let's see what will happen in 2013. İ wonder if we will still be discussing Apple vs. Samsung a year from now.
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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