May 12, 2014 — by: Karl Johnson

Samsung-logoIn the tech industry, every new market starts out with many competitors, each trying to beat the others. In the end, they all drop out except two. In the PC business, it was Microsoft and Apple. The first generation of smartphone saw Blackberry and Nokia becoming the top two. Apple revolutionized the smartphone market and basically rebooted it. A number of big name competitors entered the market at that time. Now, Apple and Samsung are the only two left.

As with the PCs, Apple takes the high road with more profits on high-quality designs, better materials and innovation. Samsung takes the low road with a free OS and plastic hardware. While the two do compete, there is room in the market for both to exist. Apple has been dominating in high end markets since the Mac Classic days and will likely do so into the future. Samsung may not be so lucky.

Samsung dominates the market by creating a cheaper smartphone than anyone else. They have become the Dell of the 1990s. Dell started to dominate because they found a way to make a cheaper PC. The problem with Dell is that someone else found a way to make a PC cheaper than Dell. The race to the bottom is always hard to stay ahead in. Apple creates unique products and does not play in the race to the bottom game.

Like Dell, Samsung does not offer anything really unique in their products. So they have to compete on price. While Samsung is dominating the market right now, they better be looking in the mirror. It won’t take long before another company comes along and creates a cheaper Android phone and take over Samsung’s market share.

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  1. Constable Odo ~ May. 12, 2014 @ 8:53 pm

    I would certainly hope there is enough space in the smartphone business where both Samsung and Apple can coexist. However, the way Wall Street sees it, one can only prosper if the other goes away. I don't know why the analysts and news media talk as though Samsung is going to crush Apple merely because Samsung puts out more low-end smartphones. Margins are so thin on the low-end that Samsung would really have to sell an awful lot of smartphones just to make some sort of profits. After all, Nokia once had major cellphone market share and what did it get them in the end. Losses and more losses. Profitability should be more important than market share but Wall Street never sees things that way. #
  2. spyinthesky ~ May. 17, 2014 @ 1:13 pm

    Well Samsung is already beginning to feel the heat with profits and ability to make their phones distinctive on the wane. HTC's phones already look far superior, indeed look the best on the market to my eye. Gut feeling is that at least one Chinese company will start to hit them very badly pretty soon simply through the political will to do so plus market size and home grown advantages. Its really a matter of time which I think even Samsung knows which is why it is on a crusade to try to destroy Apple at any cost in which it is failing and losing its Design 'guru' in the process just emphasises how scared they are by eventual failure. #

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