Why Apple is Losing Its Magic at the Hands of Samsung? – Jay Thadeshwar
When a company, founder of which had been extremely against the word “Sorry” had to come out and apologize publicly after jeopardizing the most awaited product of 2012, iPhone 5 with horrendously unqualified half finished Apple Maps, it was very evident that it was the beginning of the end of Apple’s good-times.
While on the other side, Samsung Electronics is achieving something that other technology companies tried unsuccessfully: Close the gap with Apple Inc in terms of attractiveness and product features.
Wealthy Korean company has employed a combination of expertise in engineering, manufacturing and marketing power to develop smart phones that can compete with the iPhone in both sales and attractiveness.
Samsung, the leader in the smartphone market, recently announced that its fourth-quarter profit rose 76% to a record high due to strong sales of phones, including the Galaxy S line. The latest version Galaxy S III is considered comparable to the iPhone by many consumers both in design and technical features.
Apple, on the other hand, again facing concerns over demand stagnation after announcing the iPhone 5,. The earnings for the quarter of the holiday season has also not been pleasant, which made the price of its stock fell by 14% in just two days. Since its peak on September 19, 2012, just two days before it went on selling the iPhone 5, shares of Apple have lost 37%.
At the time, Samsung had just launched an aggressive marketing campaign that included a television ad that mocked the iPhone 5.
The ad was one of the most controversial ads that Samsung released in 2011, according to Kantar Media. The creative vision behind these ads was a former executive of Nike, Todd Pendleton, who now runs the marketing department of Samsung in U.S.
The campaign convinced consumers to replace their iPhones with Galaxy S III after seeing their ads.
“If you see things so many times on TV, you just start thinking,” conceded many Apple users. Now, when someone gives them an iPhone to see a photo, it seems very small.
The attack ad is helping to extend that leads Samsung towards being the market leader. It is estimated that the company dominated 28% of the global smartphone market last year, up from 20% a year earlier, according to the survey by IHS iSuppli. Apple’s share is not growing at the same rate, reaching 20.5% in 2012 from 19% the previous year.
Tim Cook recently said that Apple is “willing to take shortcuts to generate the best world experience for the customer.”
While I strongly feel that Samsung is not as innovative as Apple in terms of design and functionality of the software but has been able to match the electronic parts of products at a lower price.
The high-end models are priced similar to Samsung phones for the iPhone in the U.S. But sometimes, the Samsung devices have been discounted, in some cases less than a quarter of the original price.
Samsung has its own facilities to produce their displays, chips and other components, allowing it to cut costs to produce smartphones in a way that few manufacturers can afford. Apple designs its own devices and some of the technologies used, but relies on other companies, including Samsung, to join their iPhones.
At the same time, the Korean manufacturer took advantage of something Apple did in the smartphone market. While the U.S. technology focused on launching a model a year in a limited price range, Samsung released multiple smartphones, of various dimensions and sizes and with different features, such as larger screens.
Samsung also quickly adopted Android, the mobile OS of Google just when the operating system was gaining popularity among consumers. That allowed them to become the largest seller of Android phones in the U.S.
In addition, Samsung offers phones based on Windows OS of Microsoft to attract consumers in emerging markets and low-income.
All this has led to a two-horse race in which Apple appears to be contemplating a slowdown in sales of the iPhone, at a time when smartphones expected to monopolize most of all mobile phone sales.