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Chaebol: the story of Samsung and why Apple is after it

Posted: , by Daniel P.

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It is precisely the line of phones and tablets starting with the first Galaxy S in 2010, which attracted Apple's attention to its largest components supplier. In Cupertino's point of view, Samsung has been mimicking the moves that made Apple the largest market cap in the world, with the only added value its manufacturing prowess, obtained through the years of making flash memory, processors and displays, rather than creativity.

Samsung, on the other hand, argues that it is different enough, as it has been having similar designs before the iPhone was introduced, not to mention it is using a third party mobile OS for its most successful products, over the features and appearance of which it has limited influence. Some argue that Samsung is just a collateral damage in the fight against Google's Android, whose introduction had Steve Jobs fuming and threatening with "thermonuclear" response, a part of which is the current patent litigation mess in the mobile tech world.

Apple court filings in support of its "copycat" thesis indeed reveal a lot of soul-searching at Samsung about Apple products in its "Beat Apple" strategy, to the extent that retail-ready products were changed after seeing what Apple announces. Samsung argues that this is a normal decision-making procedure when creating a product, looking around for what others are doing to improve your own products, and that even Apple has been doing it with the "Sony-Jony" iPhone design concept, trying to envision what the best in the industry at the time have done or would do. 

Below are a few examples of internal conversations Apple claims illustrate that Samsung has been influenced by the iPhone or iPad to arrive at the final retail versions. Long reads, but totally worth it. This one is from 2008:

Your efforts are much appreciated.

The CEO’s words to the Head of the Office of Development and to the Product Planning Team Leader, during a business trip to America, are re-summarized as follows. Please note that the CEO’s words below were relayed by the Head of the Office of Development.

'I am getting the sense that the Apple i-phone’s Touch Method (C Type) is becoming the De facto Standard in the market. I think that we should probably fully apply the C method as well. Isn’t that the demand of the carriers and the market? Excluding China, or the cases where there is no choice but to use the R method, let us think seriously about applying the C method. To apply the C method, the Icons would have to be large, and when viewing a screen with small letters, there would have to be a Zooming function, and……. I would like the executives in related areas to gather and have a discussion on this topic.'
Here we are talking tablets:

Hello Principal Shin, 

At today’s meeting to review the UX team’s P1’s usability and effect related analysis, we were requested to implement additional effects for browser related portions that are inadequate in comparison to the iPad. The requested effect items are as below: 

1. Multi window screen transition is not emotive because the screen shrinks without Tension effect. (iPad) During multi window screen transition, an effect is provided in which the screen shrinks down slightly smaller than thumbnail size then plumps up to thumbnail size.
(refer to attached 33.wmv)

2. The animation effect for multiwindow deletion is plain in comparison to the iPad. (iPad) A genie effect is provided in which the image almost seems to be folded. (refer to attached 34.wmv)

3. Non-emotive because Bounce effect not provided in Browser screen. (iPad) Bounce effect provided (refer to attached 35.wmv).
And a very philosophical one, sent to the interface design team in February 2010, on the runup to the first Samsung Galaxy S:

I have confidence in our products’ H/W, in their exterior design, and in their quality. But when it comes to the ease of use of our UX, I lack such confidence. Influential figures outside the company come across the iPhone, and they point out that 'Samsung is dozing off.'

All this time we've been paying all our attention to Nokia, and concentrated our efforts on things like Folder, Bar, Slide, yet when our UX is compared to the unexpected competitor Apple’s iPhone, the difference is truly that of Heaven and Earth. It’s a crisis of design. The world is changing, and the flow of change isn’t something that you can have come back again by going against the flow.

Metamorphosis requires energy; we have ample assets in the form of our people, so as long as we are equipped with capability, the world’s change will function for us as an advantageous opportunity. All the executives and employees in the Mobile Communications Division are diligent and exemplary that all this time, when Operators made comments about the designs we put before them, we modified and modified again, without missing a single comment. That style of business has worked until now, but the iPhone’s emergence means the time we have to change our methods has arrived.

In regards to exteriors, do your best not to create a plastic feeling and instead create a Metallic feel. As for UX, see to it that it is a UX that is easy to use regardless of age, occupation, and level of education, that it’s a UX that’s not like a UX, that, just like the flow of water, its alarm rings when you wake in the morning then out comes the news while you’re getting ready to leave for work, see to it that you’re able to come up with that kind of UX.

Our biggest asset is our Screen. It is very important that we make Screen Size bigger, and in the future mobile phones will absorb even the Function of e-books. The concern about being too far ahead is that it can also mean failure; so our designers need to think at least six months ahead; they need enough prior preparation to resolve whatever sales or product planning says about their designs.

From now on I’ll come to Seocho more often and agonize together with you. If you have something to report, don’t come to Suwon bearing a bag of mockups, just call me anytime. A judge speaks through judgments, an engineer speaks through products, and a designer should not need to speak.

That is all.


Chaebol: the story of Samsung and why Apple is after it
What's at stake? Well, it's not just the $2.5 billion of damages Apple is asking from Samsung. The Koreans make the components in-house, but sell their flagship phones at prices close to Apple's iPhone. And Samsung announced record $42 billion of investments for this year in areas like processor manufacturing in its Austin, Texas facility, and OLED displays, so it is certainly determined to maintain its edge.

Making your own components means that even with Apple's state-of-the-art supply chain that Tim Cook built, the margins on Samsung's high-end products are likely very close to the stratospheric 50-60% gross that Cupertino commands, positioning the chaebol for not only market share gains, but stellar financial success as well. In fact, according to Apple's own graph on the right, Samsung's market share shot up exponentially, and keeps climbing, with the introduction of the Galaxy Android line, but a part of that success Cupertino claims can be credited to Apple's ideas with the iPhone and the iPad. 

We'll follow how the trial progresses, and one thing is for sure - we will know much more about the behind the scenes interaction that leads to a smartphone or a tablet in these secretive companies after the final verdict.

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posted on 02 Aug 2012, 07:01 10

1. groupsacc (Posts: 232; Member since: 28 Feb 2012)


Good read. Thank you.

posted on 02 Aug 2012, 17:56 1

26. ardent1 (Posts: 1991; Member since: 16 Apr 2011)


They forget the part that Samsung would have been a communist concern had the North Koreans been successful in the take-over of Korea in 1950.

Samsung, as well as other Korean companies, owe their success to the US and other International countries that sent soldiers to stand against the North Korean communists in South Korea's darkest hours after being released from Japanese rule after WWII.

posted on 02 Aug 2012, 07:05 4

2. Droid_X_Doug (Posts: 5529; Member since: 22 Dec 2010)


Meh. Not much different than the Japanese keiretsu. You would probably see something similar in the U.S. if not for the anti-monopoly laws.

posted on 02 Aug 2012, 08:03 2

11. hung2900 (Posts: 765; Member since: 02 Mar 2012)


Similar in corporation structure, not corporation culture. The latter is proved that being the key of success everywhere on the world including Apple.

posted on 02 Aug 2012, 13:38 4

24. maxican16 (Posts: 363; Member since: 29 Sep 2011)


Agree completely. This after having worked in a large American corporation that strives to implement 6-sigma... and struggles immensely because of culture.

The philosophy read was fantastic!

"A judge speaks through judgments, an engineer speaks through products, and a designer should not need to speak."

Awesome stuff and now easier to see how Samsung got to where it is. Through INNOVATION and not simple copy cat. You don't become that hugely successful by hanging onto someone else's coattails. You do it through innovation, foresight, and hiring the brightest minds to drive your own future success.

posted on 02 Aug 2012, 07:16 2

3. Bluesky02 (Posts: 1439; Member since: 05 Dec 2011)


View as One Page, everytime I click that

posted on 02 Aug 2012, 07:25 7

4. marchels14 (unregistered)


great story,now i see why apple is threatened by Samsung because they are better at what they are doing then apple.

posted on 02 Aug 2012, 07:27 2

5. mercorp (Posts: 967; Member since: 28 Jan 2012)


Even if samsung is driven out of their electric business by apple,they can at least still rely on their construction and insurance divisions to survive. Phew!

posted on 02 Aug 2012, 07:30 15

6. Fayeznoor (Posts: 65; Member since: 15 Nov 2011)


nice article.

this is exactly what i tell my geek friends, you have to look into Apple's intention rather than copy cat claims. over past decade Samsung has gradually and successfully driven out the Biggest name and biggest innovators in electronic industry like sony, panasonic, toshiba from their core cash making business.

apple is also feeling the heat now, Samsung has already taken out smartphone market by surprise, they are gaining momentum in tablets too. the big question is, why is apple not going after other tablet makers, i don't see any difference in tablets at all. answer is simple, fear of losing the core business (apple core business is iphone and ipad now not macs or ipods)

and another perspective not related to apple , you must have noticed that Samsung is now even pushing hard in Digital Camera market and laptops too. ive used 3 Samsung laptops and they turned out to be amazing. and price for same offering was lower than HP, Dell, Toshiba still higher than Asus

posted on 02 Aug 2012, 07:42 2

9. rd_nest (Posts: 683; Member since: 06 Jun 2010)


well said man..these guys (referring to Samsung) are ruthless. they have not lost the race to anyone whichever industry they targeted.. it already started happening to smartphones, tablets will follow in few years years.

posted on 02 Aug 2012, 07:54 6

10. Daniel.P (Posts: 98; Member since: 14 Jul 2011)


They are "hungry and foolish" :)

posted on 02 Aug 2012, 11:10

21. plgladio (Posts: 311; Member since: 05 Dec 2011)


Foolish? In what way?

posted on 03 Aug 2012, 07:50

29. s.mrabet (Posts: 117; Member since: 26 Oct 2011)


In a good way !

posted on 02 Aug 2012, 09:37

17. u-suck-more (Posts: 529; Member since: 26 Aug 2011)


i agree! but my computer (which is a Samsung), is crap.. maybe their series5 ultrabooks are good but idk

posted on 02 Aug 2012, 10:14

20. Fayeznoor (Posts: 65; Member since: 15 Nov 2011)


ive series 5 ultrabook, samsung sf 310, and samsung series 3. though one thing common in them is whenever u boot the laptop firstime, the first step u must take is to uninstall all the Samsung Softwares, and ull see laptop flying high

posted on 04 Aug 2012, 02:59

30. u-suck-more (Posts: 529; Member since: 26 Aug 2011)


ooo.. is the series 5 any good?

posted on 02 Aug 2012, 07:36 18

7. Victor.H (Posts: 405; Member since: 27 May 2011)


Great read. I for once don't find it shocking that Samsung took cues from Apple. Every company would in some way copy a better product when it knows there is one. What impresses is how quickly the Samsung empire turned and managed to deliver competitive products while Nokia, RIM, Sony and many many others missed a couple of years.

Also, it's very interesting how back then Samsung realized the importance of screen size and talks about larger screens competing with eBook readers. That's one area where Samsung really took a risk with the Galaxy Note and won.

posted on 02 Aug 2012, 09:56 9

18. remixfa (Posts: 13902; Member since: 19 Dec 2008)


I dont see evidence of "samsung copying" anywhere in there, like Im sure we will see all over this thread.

That last memo was very telling. Hell, it even mimics things I and others have been saying.. Samsung nails the hardware part of the device better than anyone, but has been failing in its software. Thats part of the reason the SGS series is so popular to mod. With correct software, the phones are a monstrous dream. Also that is the reason I applauded when they made the move of hiring Steve Kond**k and started pulling talent from the Android modding scene.

What I see is a company very aware of its surroundings in the market place. Where Nokia, RIM, and HTC fell to blindness, Samsung quickly saw the market changing capabilities of Apple's iphone. They talk about apple's little effects that users like, like the shrink/grow rebounding of icons, yet that type of stuff was never implemented when it easily could have been (which would have been obviously copying)

I think this article shows without a doubt that Samsung didnt become the biggest android manufacturer.. and now the biggest phone manufacturer by accident or by copying. It became that by being very quick on its feet, very aware of the competition, and taking chances with the changes in UI (Touchwiz 2, 3,4, Nature UX are all very different and each more functional than the last), most definitely in pushing screen sizes and tech, and in their chips.. which are the most powerful chips on the market. They knew they were falling behind in software and they made dramatic steps to improve it through hiring (again, Cyanogen) and through complete UX redesigns.

Can any dissenter name 1 other phone company that reacts and changes that fast?

The article was a great read. :)

With that in mind and the articles presented, I can safely say that the market would be way better off with more "samsung" like companies and less "apple" like companies.

posted on 02 Aug 2012, 12:17 5

22. taco50 (banned) (Posts: 5506; Member since: 08 Oct 2009)


Samsing could put an Apple logo on the back of their phones and you still wouldn't see any copying.

posted on 02 Aug 2012, 14:41 2

25. thedarkside (Posts: 652; Member since: 30 Apr 2012)


yeah because minus the similarities between the iphone and the galaxy s1 there isnt any copying. none.

and how about that sony phone that apple copied?

posted on 03 Aug 2012, 01:29 1

28. zhypher_23 (Posts: 195; Member since: 04 Jun 2012)


Exactly, the G-Note is one of their flagship products besides the GS3, sh!t what about the G-Note II *Epicnezz :}

posted on 02 Aug 2012, 07:38 2

8. renegadeXC (Posts: 4; Member since: 02 Aug 2012)


Now, let me see. Samsung already predicted than phones would be used as e-book readers all the way back when there was no iBooks. I smell another lawsuit. Apple's seems to fail to grasp one thing though. It's not the flagship phones that really propel samsung ahead, but their mid-range devices just like what Nokia used to do. The mid-range is where the volume sales are. Samsung should be disclosing this as part of their court submission to prove the Galaxy S series sales where not all that stratospheric as Apple makes them out to be. What the Galaxy S did was actually drive the sales of the mid-tier phones which were capable but not Galaxy S (or iPhone) clone phones. They were mid-tier and really did the job well.

posted on 02 Aug 2012, 08:11 7

12. PapaSmurf (Posts: 7321; Member since: 14 May 2012)


This was a good article. Nice job. :)

posted on 02 Aug 2012, 08:50 7

13. Aeires (unregistered)


Exactly why the former top exec at RIM said Samsung sharpens their teeth when it comes to competition.

My only complaint about how this is going down is Apple is trying to stop a monopoly by creating one of their own to replace it with. While Samsung might have been influenced by others, they don't seek to ban other manufacturer's devices, it's a common practice in manufacturing. What Samsung does is simply out perform them with quality, something Apple needs to get back to doing. I read a comment earlier this year that nailed it, the analyst said Apple does best when they are ahead of the pack, but since Android, all they've done is run side by side with the big dogs. They lost the computer war and are terrified of losing the mobile war so they've gone into attack mode instead of developer mode. Apple is best when they are focused on innovation, something they've let slip these past 2-3 years. Even die hard Apple fans were let down with iOS6 and many doubt the vision is still there now that Steve has passed on.

posted on 02 Aug 2012, 08:51 2

14. Aeires (unregistered)


grr, being influenced is a common practice, not banning. Doh

posted on 02 Aug 2012, 21:43

27. joey_sfb (Posts: 2519; Member since: 29 Mar 2012)


Well said, to me Apple inc. used to represent Innovation with Style together with top notch marketing.

Now all their creditable engineers, designers and programmers spent their days in courtroom while others top notch manufacturers are busy designing other innovative product that may not even be a phone or tablet.

They adopt expensive lawsuits that force them to reveal more than they are comfortable and forget their primary success factor which is design product that are innovative and stylish.

They forget the world is much much bigger than American. The next innovation may not come from there.

posted on 02 Aug 2012, 09:09 4

15. shuaibhere (Posts: 1297; Member since: 07 Jul 2012)


Samsung did nothing wrong... its practice to do so in manufacturing....

now apple too put quad core processor in ip5 by seeing competition.....

its gud to see wat is happening around....

posted on 02 Aug 2012, 09:26 3

16. wsucoug13 (Posts: 164; Member since: 04 May 2012)


APPLE YOU SCARED OF THE BIG BAD CHAEBOL!!!!!! LOL

posted on 02 Aug 2012, 10:08 2

19. flipjzn (Posts: 126; Member since: 22 Jun 2012)


It seems like yesterday Samsung products were the last choice.
Tv's for instance, people who can't afford the over expensive Sony hi end tvs, Samsung was an alternate choice.
They did copy or tried to emulate and add more features or made their products better than the competition.
Today, their products are on top of the line.
I am not a fan boy, I change phones whenever something nice comes out ;)

posted on 01 Feb 2013, 10:09

32. McLTE (Posts: 637; Member since: 18 Oct 2011)


I recall the days when I sold electronics in the 90's.. I wouldn't give samsung stuff to my worst enemy! It was Sony or Panasonic or RCA even.

I recall reading an interview with top execs at Samsung back then. Their vision was clear.. to rise above and dominate. I was a bit skeptical, thinking.. beat Sony? Good luck!

Well they have. Sony like Apple have themselves to blame for it as well. Instead of striving to stay ahead of the pack, they got cocky and stalled. A company like Samsung is always driving forward.. getting better and they have.

As far as I'm concerned, Apple has nobody to blame for their apparant slide but themselves. Just look at their products.. So little has changed since the original iPhone came out.

It's unfortunate that being an American, where I try to stand by and support American companies.. I can't stand behind Apple, at all.

posted on 02 Aug 2012, 12:36

23. Superpiff (Posts: 36; Member since: 29 Jul 2012)


Lee kun should have his own chapter in the 48 laws of power,good article by the way

posted on 01 Feb 2013, 08:52

31. jasonjerkoff (Posts: 17; Member since: 12 Jul 2012)


visionary

posted on 04 Oct 2013, 10:48

33. evil.sidv (unregistered)


samsung family really knows how to invest their money. if im not mistaken korea's number one department store, shinsegae is also owned by one of the lee family

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