Ever since the release of the Samsung Galaxy S in 2010, Apple and Samsung have been entangled in legal embroilment. Meanwhile, Apple has continued to lose smartphone market share to Samsung’s cheaper phones. In Q3 of 2017, Samsung beat Apple in terms of smartphone market share, a trend that isn’t appearing to halt anytime soon. However, the relationship between Apple and Samsung is far more complex and dynamic than that of two competitors in a supersaturated market. To fully understand the relationship between the two companies, it is important to understand the positions of both companies in today’s market, their corporate identities, and where they are headed as a company.
Samsung’s direction as a company has diversified its business to a ridiculous degree. As of 2018, Samsung is a multinational conglomerate that owns more than twenty companies, offering products and services ranging from electric turbines to refrigerators and large construction projects. More importantly, Samsung manufactures numerous small electronic goods, including the LCD and OLED display screens, where Samsung holds a near monopoly. Having already established itself as a leader in numerous markets, Samsung’s latest venture into the smartphone market is a mere extension of an already enormous conglomerate.
On the other hand, Apple’s explosive entry into the mobile market back in 2006 with the introduction of the iPhone resulted in a smartphone revolution, with Apple at the spearhead. By creating the smartphone market out of thin air, Apple has been able to leverage its head start by innovating the second generation smartphone – featuring hardware and software improvements – while their competition were still pushing out the first generation of smartphones. The effects of this procedure are still prevalent today, and accounts for Apple’s hardware superiority against other smartphones – most notably Android. For example, the Qualcomm Snapdragon 835, the latest processor chip for Android phones, is benchmarked at under half of Apple’s latest A11 in-house chip in terms of both speed and efficiency.
When Samsung entered the smartphone market by introducing the Galaxy S, Apple had already secured a predominant position in the market. The Galaxy’s technology was rudimentary, and could not gain traction with the public despite Samsung’s imitation of the iPhone. However, in the past decade, Apple’s innovation has stifled while Samsung has caught up to the former and has began to introduce new features of their own. This trend is reflected in the historical market shares of both companies; Samsung’s market share evens with Apple in 2012 and then surpasses it in 2017. To further cement this problem, Apple’s revenue stream is solely dependent on its sale of iPhones, which account for 97% of its profit. To make the situation worse, Apple’s recent efforts to diversify its products and break into new markets – with products like the Apple Watch and the Apple TV – have failed.
Despite Apple’s once-leading position, having almost 20% market share over Samsung smartphones in 2009, its recent stagnation in both the smartphone market and new products have resulted in a worrisome future – in the long term – for the company. Apple’s problem is further complicated by Samsung’s near monopoly on OLED screens – accounting for 98% of global OLED production in 2016 –, of which Apple’s new flagship smartphone, the iPhone X, depends upon. Forbes reports that Samsung is charging Apple between $120 to $130 per screen, compared to the $50 figure for LCDs. Samsung gains a huge profit margin from this, while being able to provide their own mobile devices with OLEDs without markup.
Meanwhile, the Apple v. Samsung lawsuits have escalated to a global scale, as both companies sue and countersue each other in a legal fistfight. A disagreement that boiled down to the violation of patents owned by the two companies was settled in drastically different ways across the world. South Korea ruled that Apple had violated two of Samsung’s patents, and that Samsung had violated one of Apple’s. A court in California ruled that Samsung violated Apple’s patents for both the iPhone and the iPad – which was claimed to have been copied by the Galaxy Tab –, and awarded a billion dollars in damages. Even courts across Europe resolved in varying decisions, with Germany ruling in favor of Apple and the UK ruling in favor of Samsung.
Apple and Samsung are both ferocious competitors in the smartphone market – on the surface at least. They are comparable in their legal maneuvers and product innovation now, and are both converging on a similar path. The people who benefit most from their spat are the consumers, as the fierce competition fuels innovation that we expect from modern electronics manufacturers today.Loading Likes...