Samsung copying apple: a brilliant move.

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    Posted: 27 July 2012 11:18 AM

    Been thinking about the following for a while.

    Samsung (helped by google) blatantly copied apples iPhone. Most would agree with this statement.

    Samsung, however, may have played this game brilliantly.

    The odds of Samsung creating something on its own that would have sold anywhere near as well as the galaxy line of android phones (which were blatant iPhone ripoffs) is highly unlikely.

    Even after the likely massive fine in the billions of dollars is paid, and any infringing Samsung products are removed from sale and/or modified, Samsung will still remain the leading smartphone vendor in the world, and the 2nd most profitable.

    Even if the fine is as high as $5 billion dollars (unlikely), this is less than 1 quarters worth of profit for Samsung.

    It is exactly the same thing that Microsoft did in the 90s, it blatantly copied a better product from it’s chief rival, gained massive marketshare, and then ended up saying “my bad, here’s a little but of cash to settle our differences”. Microsoft remained the PC king for 2 more decades.

    Losing the upcoming court cases will not hurt Samsung outside of the relatively small cash outlay it will make (small compared to the amont of money it will make from selling smartphones over the next 5 years).

    Blatantly ripping off Apple was a scum move, but in the end it may have been the best move on samsungs part.

    (the only way this could have been prevented would have been a fast acting court process shutting down the blatant rip-off products when they first appeared, but this was never going to happen in time and in enough markets).

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  • Posted: 27 July 2012 11:46 AM #1

    And it couldn’t have happened without Eric T. Mole stealing iOS and calling it Android.  Schmidt’s behavior should go down in history as the ultimate example of dishonesty and thievery in business.

         
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    Posted: 27 July 2012 11:47 AM #2

    since ancient times.

    copy and never mind “possible” consequences

         
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    Posted: 27 July 2012 12:14 PM #3

    Better to ask forgiveness than permission? There won’t be a fair outcome, but we can dream. I’d like to see Samsung suffer in the courts and in its business with Apple.

    I want to see Apple hurt Samsung in its pocket by sourcing parts elsewhere.

    I want to see courts oder financial penalties on Samsung and other Android makers and major cuts to Android features stolen from Apple.

    Dreaming big, I’d like to see courts order Samsung to give all its Android smartphone profits since 2007 to Apple and exit the cell phone market for 5 years.

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  • Posted: 29 July 2012 08:18 PM #4

    The best thing Apple could have done would have been to shift to lower margins more quickly in response. At >50% there’s a lot of room for another company to build the same or equivalent hardware (with a lesser OS), sell it for 20% or more less, and still make what most companies consider a healthy margin. At 30%, it would be very difficult to undercut Apple on equivalent hardware and make any money.

         
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    Posted: 29 July 2012 09:56 PM #5

    Another mistake was buying ANYTHING from Samsung once their rip off program was known.

    Take those billions in the bank, do whatever it takes to move EVERYTHING out of their fabrication factories, thus starving them of volume, and experience AND an inside looksee at Apples plans.

    WHY they have anything to do with them OR Google, is mind boggling.

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    Posted: 29 July 2012 10:33 PM #6

    I think we are a bit early to assume Samsung has won the game.  Apple has partnered with Samsung for a bunch of subcomponents and foundry service for their A series processor.  I’m sure Apple is looking at other suppliers for future contracts and this is a direct result of Samsung’s copying Apple’s designs.  Apple is the largest buyer of semi conductors in the world so it’s not like losing 10B in business won’t hurt.  Samsung may sell a bunch of handsets, but I wouldn’t expect much future Apple business no matter the results of the lawsuits

         
  • Posted: 29 July 2012 11:02 PM #7

    TanToday - 30 July 2012 12:56 AM

    Another mistake was buying ANYTHING from Samsung once their rip off program was known.

    Take those billions in the bank, do whatever it takes to move EVERYTHING out of their fabrication factories, thus starving them of volume, and experience AND an inside looksee at Apples plans.

    WHY they have anything to do with them OR Google, is mind boggling.

    +1 I think Apple is doing exactly this with discipline and patience.  Samsung will wake up one day to see it encircled with new competitors, financed by Apple’s cash hoard.  The old saying may apply here:  Keep your friends close and your enemies closer.

    And my prediction:  Samsung is going to have some very tough days in court, starting this week.

         
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    Posted: 30 July 2012 12:47 AM #8

    pats - 30 July 2012 01:33 AM

    I think we are a bit early to assume Samsung has won the game.  Apple has partnered with Samsung for a bunch of subcomponents and foundry service for their A series processor.  I’m sure Apple is looking at other suppliers for future contracts and this is a direct result of Samsung’s copying Apple’s designs.  Apple is the largest buyer of semi conductors in the world so it’s not like losing 10B in business won’t hurt.  Samsung may sell a bunch of handsets, but I wouldn’t expect much future Apple business no matter the results of the lawsuits

    Sell AAPL.  Clearly it’s made the blunder of the millenium by “partnering” with a competitor (Microsoft, Google, Samsung (buying NAND flash before the iPhone, even!), LG, Toshiba…).

    pats is right.  Yes, Apple could be said to have made “mistakes” here.  But it’s too simplistic.  And ARM is way, way too out there to make a serious allegation that Apple gave away the keys to the kingdom through hardware specs.  See Google and Project Butter, see iPhone OS 1.0 having butter built in from day one.  It’s one thing to have plans.  It’s another to refine and execute.  Apple has never made any accusation of AX SoC misappropriation, and the A-series is meticulously tuned for Apple products anyway.  As for Android, sure Samsung is an offender, but it’s only riffing off of the OS that Google “built” in the first place.  And amidst all of this is the usual fierce competition that often involves drawing inspiration from leaders to the point of embarrassment or possible IP ripoff.  A MacDailyNews-like “how could you partner with the enemy, Apple?!” or “how could you not drop all ties with competitors RIGHT THIS SECOND?!” conveniently avoids so many complexities that we outside observers could never hope to fully understand.

    In any case, Apple is continuously reevaluating partnerships and supply agreements.  I wouldn’t worry too much about Apple making a Mac OS look-and-feel license-scale blunder anytime soon.

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    Posted: 30 July 2012 01:14 AM #9

    Tom Bowley Says;

         
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    Posted: 30 July 2012 01:26 AM #10

    Looks like a great AAPL Chart Talk post, actually.  Maybe posted here by mistake?

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
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  • Posted: 30 July 2012 03:14 AM #11

    Zeke - 27 July 2012 02:46 PM

    And it couldn’t have happened without Eric T. Mole stealing iOS and calling it Android.  Schmidt’s behavior should go down in history as the ultimate example of dishonesty and thievery in business.

    And also an incredibly shortsighted move by Jobs to have that scum sit on Apple’s Board.  The ultimate misjudgment of character of a person who did more to damage Apple than anyone.

         
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    Posted: 30 July 2012 04:12 AM #12

    Mike in Helsinki - 30 July 2012 06:14 AM
    Zeke - 27 July 2012 02:46 PM

    And it couldn’t have happened without Eric T. Mole stealing iOS and calling it Android.  Schmidt’s behavior should go down in history as the ultimate example of dishonesty and thievery in business.

    And also an incredibly shortsighted move by Jobs to have that scum sit on Apple’s Board.  The ultimate misjudgment of character of a person who did more to damage Apple than anyone.

    We are crying over spilled milk.  Look where we are now compared to 5 years ago. 

    This is about fairness and rule of law.  But as far as damage, that is debatable since Apple sells every iPhone and iPad they can make.

    Samsung will follow LG and HTC in 5 years.  Google will limit Android or start to make demands but more importantly Apple is slowly changing manufactures and moving away from Samsung.  Give it 5 years and we are looking at a different mobie world and players.

         
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    Posted: 30 July 2012 04:28 AM #13

    Good point.

    Samsung and Google are competitors.  Google has a vested interest in making Moto into a success.  And Samsung is quite literally eating Google’s lunch, being the only other significant player making any significant profit in the handset space.  Sure Google makes some money off Android, but it’s nowhere near Samsung and Apple money.

    This is gonna get interesting over the next few years.  Sure, Google could be an all-in partner with Samsung, but what was the point of that $12.5B purchase anyway?  Moto was hardly a $12.5B threat to Google then or in the future IMHO, but what do I know.

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  • Posted: 30 July 2012 09:46 AM #14

    omacvi - 30 July 2012 07:12 AM

    This is about fairness and rule of law.  But as far as damage, that is debatable since Apple sells every iPhone and iPad they can make.

    Apple sold 26M iPhones this past quarter.  They sold 37M and 35M in the preceding quarters.  Clearly they can make more than 26M phones per quarter.  I have never agreed with this “sell everything they can make” argument.  Now we have hard evidence that it is wrong.

         
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    Posted: 30 July 2012 11:24 AM #15

    Lstream - 30 July 2012 12:46 PM
    omacvi - 30 July 2012 07:12 AM

    This is about fairness and rule of law.  But as far as damage, that is debatable since Apple sells every iPhone and iPad they can make.

    Apple sold 26M iPhones this past quarter.  They sold 37M and 35M in the preceding quarters.  Clearly they can make more than 26M phones per quarter.  I have never agreed with this “sell everything they can make” argument.  Now we have hard evidence that it is wrong.

    I think it is safe to assume Apple can manufacture more iPhones then sold last qtr so we definitely have a demand issue, but based on the US numbers there is still plenty of growth potential.  Foxconn was doubling the workforce at the Zhengzhou iPhone factory back in Jan, and Apple still has the capability to significantly expand their distribution.  Samsung has much wider distribution.  The S3 was available in 145 countries vs 100 for iPhone and they offer multiple devices at different price points vs two or three from Apple.  The blatant copying allowed Samsung to offer accelerate their development cycle without the risk of missing the mark knowing that Apple design was a success, and they had much wider distribution so while Apple built their carrier relationships, Samsung flooded the market with iPhone like devices and in the process enhanced their brand value at the expense of Apple.

    http://micgadget.com/21420/thousands-line-up-for-foxconns-jobs-in-zhengzhou/