Samsung: Here is Why Apple Should Be Afraid

Samsung has released sales number for the Samsung Galaxy SIII. I would like to share my views (with the Apple Core Family) on where the company is heading and how this will affect Apple.

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After announcing 20 million Galaxy 111. Is Samsung on the verge of doing in the smartphone market, what it did to the Flat Panel TV market?

To answer this question, it's important to look at Samsung's history. The company was founded in 1938, by a businessman Byung-Chull in Taegu, Korea, with 30,000 won.

According to Samsung's records, Byung-Chull started his business focusing primarily on trade export, selling dried Korean fish, vegetables, and fruit to Manchuria and Beijing. Today Samsung has become a multinational conglomerate company. It comprises numerous subsidiaries and affiliated businesses, most of them united under the Samsung brand. These include - Samsung Electronics, Samsung Heavy Industries and Samsung Engineering to name a few.

Samsung produces around a fifth of South Korea's total exports. The company has a powerful influence on South Korea's economic development, politics, media and culture. In a nutshell we have a company that is extremely powerful in South Korea. Apple Inc does not have the same power and influence in America.
Samsung in the Flat Panel TV Business

In 2011 Samsung extended its lead over other Flat-Panel TV manufacturers. According to a Displaybank report, "Samsung and LG's LCD-TV shipments have grown by 12% and 6%, respectively, compared to 2010, and Sony has seen 6% negative growth."

This growth continues in the 2012 according to Q2 figures from Displaybank. A survey by ABIresearch illustrated that people in the US are more likely to purchase a Samsung TV in the future than another brand.

According to the report:

Samsung captured the top position in US consumer HDTV purchase intent for the first half of 2012, passing Sony who previously had a commanding lead in the segment. LG and Vizio also had notable increases over earlier surveys that further eroded Sony’s position. Of the 25% of respondents who claimed an interest in purchasing a HDTV in the first half of 2012, 20% cited Samsung, followed by 19% for Sony (previously 27%). LG generated the largest increase, jumping from 6% of respondents to 12%, with Vizio claiming 11% (up from 8%).

Senior analyst Michael Inouye had the to say about the report, "Samsung has perhaps found the right balance between pricing, features, and form factor as the company continues to outpace the competition in the flat panel TV market."

That statement by Michael Inouye, essentially defines Samsung winning strategy in the TV market. And guess what? The Korean company is about to do the same to the smartphone market.

Samsung in the Smartphone Market

Samsung is using the same business strategy in the smartphone market as it did with TV. Of course, there are obstacles to overcome, but Samsung have the resources and experience to do this. The only difference here is that Samsung is up against Apple instead of Sony.

I believe that having Apple as the arch-enemy makes things a lot easier. Apple and Sony share a lot in common in terms of business model. Both companies believe in innovation and making great products. They also have a tendency to incorporate proprietary technology into their products, thus creating close systems.

Apple and Sony also enjoy high brand loyalty among consumers. Some may say that having this brand loyalty might give an Apple a huge advantage against Samsung. I view this differently. This brand loyalty didn't help Sony and it wouldn't help Apple in the long run.

I own several Sony products because of their great design and reliability. However, I went out and purchased a Samsung LCD TV when my old TV broke. Why? Samsung's TVs packed the same features and in some cases more than Sony's TVs. As a bonus, I got my Samsung TV at a cheaper price.

This survey by ABIresearch indicates that I'm not the only one to express these views. In some cases, Samsung's products just give you more value for money than other brands. Apple and Sony products are often viewed as overprice with limited functionalities, hence catering for those with huge disposable incomes.

Apple's worst nightmare would be that this perception creeps into the smartphone industry. Yes, I know that this is already the thinking of the Android Amy. However, I'm talking about the average consumers who just want a smartphone. If this happens and people are looking for an alternative, Samsung already has a plan. The Korean company is currently shipping smartphones with the right balance between pricing, features, and form factor. Where have we seen this before? You guessed right. The Flat-Panel TV market.

What the future holds for Samsung

After selling 20 million Galaxy S III in 100 days, Samsung is on a tear. Not even a bruising in a US court will stop this Korean runaway train. The company took a gamble in copying the iPhone and it paid off big time. They can now afford to pay a few billions for past infringements without denting the cash reserve.

I also believe that in the future if a similar scenario presents itself, Samsung will do the same to survive. They can justify this by saying to their critics - look what is happening to RIM and Nokia. This is a company with vast resources at its disposal and a whole nation cheering it on. Contrary to what Apple might want others to think, Samsung is an innovative company in its own right, especially in the display department. The fruits of these innovations will be seen later with the onslaught of more AMOLED and flexible display products.

So, should Apple be afraid? In my humble opinion the answer is yes. Samsung will not be taking any prisoners in this smartphone war. They are in it to win it.
Sources: Samsung, ABIresearch, Displaybank