The real threat that Samsung poses to Apple

A very Interesting analysis by James Allworth on the Apple - Samsung relation. I’ve expressed similar views on the Verge forums here and got slated for doing so.

Here is a snippet of what he had to say:

There’s another way of seeing just how deep the problem lies. Jobs promised “thermonuclear war” on the copied devices, and so far, the biggest target of Apple’s many legal warheads has undoubtedly been Samsung. Getting a $1 billion judgement certainly proves Apple was serious about it. But doesn’t it seem strange to you that the target of such a devastating strategy on the legal side, just so happens to be… one of the most important suppliers for Apple’s new phone?

The problem that Apple is facing right now has nothing to do with their designs being copied. There is a long history of copying in the tech industry; patents being deployed in lawsuits by giants often signify desperation more than anything else. Rather, the problem that Apple faces is that it now is going up against at least one competitor that has been a beneficiary of the scale that Apple has achieved on the business side. Samsung has clearly demonstrated that, like Asus, it was not satisfied being a low-margin ODM — of doing all the menial work while somebody else made the big bucks. Suing Samsung over Android patents isn’t going to change that — if Google’s operating system gets too expensive to use, there’ll be a switch made to Microsoft. Or to another operating system altogether. It doesn’t really matter, because design in the smartphone space has been commoditized. It’s good enough. Manufacturers are now creating performance that most consumers aren’t able to absorb. Instead, as we’ve moved into a world where performance is now “good enough”, the world has flipped into one where it’s the business side — operational scale — that matters most.

Apple's (Steve Jobs) second biggest mistake (hiring Eric Schmidt was the 1st) was sourcing out so much of their manufacturing of the iPhone to Samsung.