Professor Foluso Ladeinde, Daily Trust
March 11, 2013
It seems that Samsung is coming out on top in more ways than one, for example, in its battles with Apple. For one, the much talked about $1.05 billion patent win that Apple had over Samsung has now been slashed down, as Samsung only needs to pay approximately $600 million now.
It was on 27 August 2012 when Apple submitted a list of Samsung devices that it wanted removed from the market and banned in the U.S. The dollar value of the judgment was the largest in history, and it reinforced Apple's innovation superiority. However, as it now stands, the scale of the victory for Apple is much smaller, and might actually still get adjusted downwards if Samsung has its way. As Ian Sherr pointed out in his 2nd March 2013 New York Times article on the matter, "The ruling is a setback for Apple, which has locked horns with Samsung in courtrooms around the world for nearly two years - one of the most prominent in a series of patent battles in the smartphone industry."
Samsung is also evolving in many other directions. On the particular patent case in question, it seems that Samsung has been able to use its own style of innovation to modify its smartphones and tablets so they no longer look like Apple's. Thanks to the huge amount of money that Samsung sinks into research, which is way larger than the amount spent by Apple, Google, or Microsoft.
Perhaps more ominous for Apple are the other kinds of win that Samsung is having. Samsung is indeed taking some big bites out of the apple, in an attempt to forcefully commandeer Apple's lunch. The fact is that consumers are fleeing from iPhone and iPad in favour of Samsung devices. Steve Jobs must be turning in his grave!
A Wall Street Journal article by Dhanya Ann Thoppil, Amol Sharma, and Jessica Lessin on 27 February 2013 goes into some details on how Apple is lagging behind Samsung in India in the shipments and sales of phones. The same trend is mentioned for the U.S. and China. That is, Apple is losing ground to Samsung in the world's three largest smartphone countries. The authors pointed out that Apple accounts for only 5% of smartphone shipment to India in the third quarter of 2012; whereas Samsung's number was 40%. This makes Samsung the market leader. "The South Korean company surged ahead in India by making the country a high priority market earlier than Apple did and it offered a range of phones that are based on Google's Android software that start at just over $100. An older iPhone starts at nearly $500 while the latest model starts at nearly $850." Thus, the price performance of Samsung's products is indeed quite superior to Apple's, a metric that is particularly relevant in a country like India where the disposable income is very low. "Most of India's 865 million wireless users still use low-cost feature phones and carriers don't subsidize smartphone purchases, as they do in the U.S." Another reason for Apple's poor performance in India, despite Steve Job's attachment to the country when he was a young lad, is the fact that Apple just did not pay enough attention to the country when compared with its investments in, say, Brazil or China. On his part, Apple's Chief Executive Tim Cook blamed his company's lackluster performance in India to the country's "messy distribution networks," which basically translates to a multilayer of sketchy schemes with a large number of "middlemen." Indeed Apple is the sixth in smartphone shipments to India, behind Samsung, Sony, Nokia, LG, and Research In Motion (RIM).
Samsung's range of house-hold appliances such as TV, its heavy investment in the India market, the relatively low cost of its phones, and its much greater retail reach will help to maintain the company's lead over Apple in India and perhaps elsewhere.
Apple isn't the only target for Samsung. It's well known that a large proportion of Samsung's smartphones and tablets are driven by Google's Android operating system. By leveraging on its investment in Android, Samsung also seems to be going after RIM, particularly for business customers who have usually favored RIM's Blackberry. Samsung is promising prospective business customers better security than is available in Blackberry; thanks to Samsung's Knox software, which is a version of Android with better security features. Knox is scheduled for release in the second quarter of 2013. Brian Chen and Ian Austen in an article in the 28 February 2013 issue of New York Times pointed out that Samsung was "teaming up with General Dynamics, a U.S. military contractor, to ensure its phones met the strict security standards of U.S. government agencies." It is speculated that Knox will first be introduced into Galaxy S IV, which is scheduled for release in an event in New York City in 3 days (March 14). Above other security features of Android phones, Samsung is building a "trusted component" into the hardware of its phones. The feature will verify that the phone's security and operating systems have not been tampered with or corrupted.
While building competencies by exploiting Google's Android OS, Samsung may not have a plan to veer for Google on its way to the top! As Amir Efrati puts it in the 26 February 2013 article in Wall Street Journal, "Samsung sparks anxiety at Google," suggesting some tension in the partnership between two companies, who on the other hand, also see each other as partners in their fight against Apple. The speculation is that Google fears that Samsung will demand a greater share of the online advertising revenue that Google generates from its search engine.