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Samsung Becoming the Apple of Our Eye?

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, {complink 379|Apple Inc.} and {complink 4751|Samsung Electronics Co. Ltd.} 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?

22 comments on “Samsung Becoming the Apple of Our Eye?

  1. t.alex
    January 9, 2013

    I recently heard some new Samsung starts selling Tizen-based phones. Tizen is a another Operating System developed by Intel. Will this work out anything interesting? I am not so sure because both Intel and Samsung are the hardware guys. Isn't it true they need some software guy like Google with Android to make the phone interesting?

  2. _hm
    January 9, 2013

    The most admirable contribution from Samsung is to keep price under control and bring it lower for common person. Thanks Samsung and Goolge.

     

  3. Anand
    January 10, 2013

    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.

  4. Anand
    January 10, 2013

    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.

  5. Anand
    January 10, 2013

    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.

  6. Wale Bakare
    January 10, 2013

    >>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. 

  7. Wale Bakare
    January 10, 2013

    I think Samsung has had its trying times but taking the leading. For how long can it last on the throne?

  8. Wale Bakare
    January 10, 2013

    >>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.

  9. bolaji ojo
    January 10, 2013

    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.

  10. bolaji ojo
    January 10, 2013

    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.

  11. bolaji ojo
    January 10, 2013

    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.

  12. Barbara Jorgensen
    January 10, 2013

    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.

  13. t.alex
    January 10, 2013

    anandvy, HTML5 apps seem promising! Let's hope this is another strong choice for the developers as users.

     

     

  14. Cryptoman
    January 10, 2013

    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.

  15. Anand
    January 10, 2013

    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.

  16. Wale Bakare
    January 11, 2013

    >>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.

  17. dalexander
    January 11, 2013

    @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.

  18. bolaji ojo
    January 12, 2013

    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!

  19. bolaji ojo
    January 12, 2013

    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.

  20. Wale Bakare
    January 12, 2013

    >>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.

  21. Anna Young
    January 13, 2013

    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.

  22. t.alex
    January 16, 2013

    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.

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