There’s another way to put that which is perhaps more succinct and which fits better the struggle between Apple and Samsung. ‘Karma is a bitch‘ comes to mind. Once heady and frothy Samsung seems to have fallen into Apple’s shadow. Again.
The Coming Slowdown Is Here
Samsung makes more smartphones than any manufacturer, including Apple, and has for years, even competing with Apple on revenue and profit growth.
The often scandalized and criminalized Samsung, known as much for stealing designs and strategy from other companies as it is for making money, has hit ‘the wall.’
In other words, growth has slowed. Samsung’s smartphones and tablets sales have taken a beating from Apple at the high end, and are getting pummeled at the low end, a squeeze which has diminished once glowing profits.
The Korean conglomerates executives warned Wall Street that earnings will remain stagnate this year, and the growth of recent years has ended.
See? Karma is a bitch.
In fact, Samsung’s near future in other product categories seems uncharacteristically bleak. Nearly 25-percent of the company’s profits come from chip manufacturing and Apple, one of Samsung’s largest customers, is believed to be ready to move iPhone and iPad chipmaking to other vendors in 2014.
Even Samsung’s once vaunted display business– smartphone and tablet screens, and televisions– has seen a 90-percent drop in profits. Samsung’s consumer electronics division also saw a dramatic drop in profits.
Say What’s Going On?
What’s going on? In smartphones and tablets Samsung is being squeezed by Apple at the premium end and by Chinese manufacturers on the low end. The company is unable to maintain margins to compete with the iPhone and iPad and price sensitive customers are going for lower priced products.
Samsung is having difficulty differentiating itself from cheaper smartphone and tablet knockoffs, but hasn’t been able to achieve the brand loyalty commanded by Apple.
If ‘what goes around comes around‘ is true, Samsung’s big bet to compete head-to-head with Apple isn’t paying off as well as the company hoped it would. The tarnished reputation of a convicted criminal company doesn’t sit well with customers at the premium end of the marketplace.
For now, despite blatantly stealing technology from customers, copying competitors and customers at every turn, and spending untold billions to market itself as the mobile industry leader, Samsung remains in Apple’s shadow.
Not So Strange Bedfellows
Over the weekend, Samsung and Google announce a cross-license patent agreement, obviously with Microsoft and Apple in mind. The agreement covers existing patents and future patents over a 10 year period. Neither Samsung nor Google disclosed the financial terms of the agreement.
Samsung is one of Google’s closest hardware partners, and collaborates with the search giant on smartphones and smart televisions.
Other than the financial aspect, the question most asked will be ‘What impact will this have on Apple or Microsoft?’ For Apple, probably not much. The Mac maker has a long record of winning or settling patent disputes, so the move by Samsung and Google should only be described as defensive.