x PhoneArena is hiring! Reviewer in the USA

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

Posted: , posted by Daniel P.

Tags :

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:

Here we are talking tablets:

And a very philosophical one, sent to the interface design team in February 2010, on the runup to the first Samsung Galaxy S:

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.


  • Options

Want to comment? Please login or register.

Latest stories