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A COMPARITIVE CASE ANALYSIS OF APPLE PLC AND SAMSUNG

Contents INTRODUCTION ....................................................................................................................................... 1

TECHNOLOGICAL INNOVATION .............................................................................................................. 1

RESEARCH AND DEVELOPMENT ............................................................................................................. 2

Analysis of Samsung and Apple Plc in terms of Price, Design, Quality and Support .............................. 3

Technology ............................................................................................... Error! Bookmark not defined.

SWOT analysis of Apple Plc and Samsung .............................................................................................. 4

APPLE PLC ............................................................................................................................................ 4

SAMSUNG ........................................................................................................................................... 5

Porter’s five force model comparison for Apple and Samsung .............................................................. 5

Conclusion ............................................................................................................................................... 8

INTRODUCTION

The aim of this essay is to compare and contrast the technologies of two companies in the

consumer electronics industrial sectors. In terms of brand value, Apple holds the first

position and the second position is held by Samsung whereas in terms of market share,

Samsung holds the top position in the mobile sector. In the Tablet section, currently Apple is

leading (Martin, 2013). The two companies are competing hard in nearly all the sectors.

Both Samsung and Apple produce high profits, but compared to Apple, Samsung produces

huge revenues annually. Samsung unveils high tech and new products every year whereas

Apple has taken a slightly backseat in terms of innovation, though it is into the preparation

of its next innovative item, i.e., Apple TV (Martin, 2013). Apple and Samsung depend highly

on R&D and innovation (of new technologies) (Hughes, 2014). According to (Asay, 2013), as

per the survey of executives at 700 firms Apple topped the list of the globe’s most

innovative company. The author further opines that Samsung is on its way to attain the title

of innovator, which is evident from its blending of concepts of smart phone and tablet in its

Galaxy Note 2.

TECHNOLOGICAL INNOVATION

According to the reports by CNN (2013) Apple Inc has occupied prime position in the world’s

innovative company lists. The innovation of the Apple products is considered as the key

point of company to edge in the competitive market. The next generation iPhone, the

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iPhone 5C is released with low cost. The philosophy of innovation on Apple is purely related

with customer satisfaction. Launch of iPod, iPad, MacBook were some of the highlights of

Apple. Introduction of iPad meets the specific needs of customer and entertains them with

easy accessibility on music, gaming, and internet. iPad tends to be the portable device for

the customers. Apple Inc has captured maximum shipment of their tablets during 2013. The

share on tablet market of Apple is considered as 45%.

The Samsung approaches the innovation on the basis of competition by giving more

importance on number of models, features and innovations per year. Samsung gained the

first position in innovation approach and it is ranked at the second position for its

implementation. Samsung faced criticism on their innovations. At the same time Samsung is

ranked at the second position with acquiring only half of the share of Apple on tablet

market. The reports from CNN (2013) states that sales of Samsung Galaxy notes were at

least 10 million. The Samsung’s innovation on Galaxy-II with updated version and ever large

screen is a huge achievement for a single android device. Galaxy 10.1 is considered as the

Samsungs best galaxy device which enables customers to take advantage on stylus.

Uniqueness and innovative technological designs made the apple to perform competitive

edge over the electronic production companies. The competition between Apple and

Samsung still continues at great fierce. Samsung was involved in a case related to the breach

against the patent of Apple. In August 2012 jury determined that the overview of Samsung

shows similarity on Apple devices and its features. Apple was awarded $120 for the case

against Samsung (Korea Times, 2013).

RESEARCH AND DEVELOPMENT

Apple Inc keeps considerably a smaller investment on R & D for the development of their

new products. Apple spends much less on R and D than its competitors. Martin (2013) states

that Apple spends $3.5 billion and Samsung spends $11.4 billion annually towards to R&D at

2013. In spite of creating new products, Apple focuses on improving the existing innovations

made by them. Thus Apple spends only a lower amount on Research and Development.

Samsung tends to bring out new products and spends billions of dollars towards the

investment on R&D. Samsung occupies its position in one of the top 10 global companies in

R&D investment. According to the report from Korea times (2013) the South Korean giant

Samsung company starts to equip with new other five more R&D and decided to spend $4.5

billion as an investment to it. The feature from Hughes (2014) highlights that Apple Inc

invested $1.42 entirely on R&D in the second fiscal quarter of 2014. As per the reports from

Financial Times (2014) the highest percentage investment made by Apple in 2006, is $1.6

billion which represents 4% on sales, that was in the year before iPhone released. The

investment of huge amount by Apple in R&D resulted to the development of iPod, iPhone,

Mac etc.

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Analysis of Samsung and Apple Plc in terms of Price, Design and Quality

Apple Inc and Samsung are both potentially leading companies. According to reports

generated by Martin (2013), Samsung made use of Google Inc Android software to develop

iPad and iPhone. This resulted in the increase of market share of Samsung competing the

same of Apple. Apple iPad Air and Samsung Galaxy Note 10.1 are new releases from Apple

and Samsung.

CNN (2013) reports that there are some reasons to choose Apple iPad Air by the customers

while comparing with Galaxy note 10.1. Apple iPad air exhibits sophisticated features such

as 128 GB internal memory, comparatively smaller size, IPS LED better screen, 4G and Wi-Fi,

video calling and its light weight. Comparing to Apple iPad Air, the Samsung Galaxy note

displays notable features such as, expandable storage capacity up to 64GB,higher data

transfer speed,3GB RAM, camera flash, higher pixel density etc. Apple substituted the

challenging features of Samsung galaxy S4 with the Apple iPhone 5S. The Apple iPhone 5s is

available with silver, gold and space grey and physical design is slimmer and lighter than

Samsung galaxy S4.

It is observed by Williams (2014) that Apple products are more costly than Samsung. Brand

loyalty, quality, product design and features are the main reasons for increasing the cost of

Apple products. The operating systems of iPod and iPhone are made of excellent designs.

The Apple always tries to choose their best for its customers. Apple designed their products

by taking the customers into consideration. This approach reflects in their simplicity and

portability of products. Samsung doesn’t keep more concentration on design, they focus on

the feel of the customer and the way the product is built in. According to Asay (2013),

Samsung takes the systematic effort to attract the customer to their products. The product

design of Samsung attracts the customers externally and internally. Some of the Samsungs

notable smart phones are Galaxy S5, Nexus series and Note series. The features exhibited by

Samsung in its products are sending and receiving email, web browsing, access to music,

photos etc.

Apple concentrates more on quality and simplicity of the products. The Apple products-

HDTV, iTV, iPods, iPhones meets the customer expectation and their satisfaction. Apple

products have attained the customer attention due to its award winning functions and

features. Samsung products are usually not weightless. Apple iPhone is the strong

competitor to the Samsung galaxy S5. Galaxy S5 beats the 5.1 inch display with Apples 4

inch display. The Samsung has introduced finger print sensor on Galaxy S5. Apple iPhone is

the strong competitor to the Samsung Galaxy S5.Galaxy S5 beats the 5.1 inch display with

Apple’s 4 inch display. Samsung had introduced finger print sensor on galaxy S5.samsungs

Galaxy gained equivalence with android. Samsung is in the development stage through the

up gradation of the devices and software. Apple makes their customers to wait for nearly

one year to introduce their new innovations to them (Shaughnessy, 2014).

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SWOT analysis of Apple Plc and Samsung

According to Morden (2007) SWOT analysis is a planning technique and is a good and

straightforward method for conducting analysis of an organization on its environmental

factors. SWOT stands for Strength, Weakness, Opportunity and Threats in which Strength

and Weakness forms part of the internal environment of the organization and Opportunity

and Threats that of external environment.

A comparative SWOT Analysis of both Apple Plc and Samsung is conducted below:

APPLE PLC

Strengths

Excellent interfaces

Strong brand reputation due to excellent design and quality

Customer loyalty

Huge money in hand for R&D and expansion

Can demand more price for quality products

Proficient in software, hardware and services (Morden, 2007).

Weaknesses

The differentiation of products is limited causing users to switch to other products

with particular needs

Prices are high in comparison to other smartphones with same functions

Flaws in new technology

Decline in sales of PC (Morden, 2007).

Opportunities

The growth in demand for tablets and smartphones

Integration with iCloud

Providing appealing Apple products to the companies (Morden, 2007).

Threats

Limitation in terms of choice

Cutting of other smartphone manufacturers into the market shares of Apple

Economic crisis will lead to high prices of its products to be less alluring (Morden,

2007).

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SAMSUNG

Strengths

Superior hardware engineering and production

Environmental focus

Integration of hardware with software and OS

Design and innovation

Maximum market share in mobile sector and second position in smartphones

Low cost of production (Hill and Jones, 2009).

Weakness

Concentration on various products

Low margin in profits

Patent violation

Weak products in customer’s perception

Enhanced competition (Hill and Jones, 2009).

Opportunities

The growth in demand for application processor

The growth in mobile advertising sector

Acquiring patents via acquisitions

The growth in the market of tablets

The growth in the market of smartphones in India (Hill and Jones, 2009).

Threats

Production of Chinese products at low cost

The emerging nanotechnology may pose threat to Samsung's Drum technologies

Saturation of smartphone market in developed nations (Hill and Jones, 2009).

Porter’s five force model comparison for Apple and Samsung

The Porter’s five force model is a commonly used model in analyzing the ability of an

organization in generating or sustaining competitive advantage. The model details about

five forces namely (a) threat of new entrants, (b) bargaining power of buyers, (c) bargaining

power of suppliers, (d) threat of substitutes and (e) the intensity of competitive rivalry (Hill

and Jones, 2009). The comparison for Apple and Samsung using Porter’s five force model is

summarised below.

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Threat of new entrants for Apple (Low): It is a known fact that Apple significantly rules the

consumer electronics market. Apple’s products are unique even when compared with

Samsung which suggests that Apple offers unique products. The threat of entry is low

because Apple continuously differentiates its products when compared to its rivals such as

Samsung. Also, Apple has extensive production so that it can produce products at a reduced

cost owing to its economies of scale. These reasons points to the Apple’s leadership in this

industry with regards to the new entrants in the market (Gong, 2013). These reasons are

due the Apple’s introduction of iPhone and iPod. Before the introduction of these products

most companies in this industry were putting in huge efforts in R&D for introducing

products that were new and unique in the market but Apple met with success in this regard

before other companies. The launch of these products took Apple to the top position and

aided in gaining competitive advantage over its rivals such as Samsung. And after that Apple

constantly innovated and launched new products into the market.

Threat of new entrants for Samsung (Low):It is difficult to get entry into a sector where the

prevailing companies are already operating on strategies such as cost and product

differentiation (Yu et al, 2014). New entrants of Samsung would also have to face issues

with overcoming the patents if there is no planning by them in investing in their own

research and development for producing unique products.Because of these reasons the new

entrants would need to make competitive brand recognition which in the beginning is really

hard to achieve. Also, customer loyalty is another factor that the new entrant will have to

overcome. These factors make very strong barrier to the market entry.

Bargaining power of buyers for Apple (High): Apple products always have top of the market

prices and consumers looking for cheaper products have many other options in the market

(Yu et al, 2014). Recently Apple released iPhone 5C as a cheaper model of iPhone 5S but the

price of iPhone 5C was still higher than that of many models of other competitors. Another

drawback is that if Apple tries to develop a cheaper product, it might tarnish its brand

exclusivity and product quality(Gong, 2013). Apple had low bargaining power of buyers in

the past because their products were always considered superior to the products of their

competitors. But nowadays there are many products which are on par with Apple’s

products.

Bargaining power of buyers for Samsung (High): Consumers have lot of options in mobile

phone industry, so they have higher bargaining power. The availability of more bargaining

points like price, OS, camera and other tech specs in mobile phones also plays an important

role in customer choices(Hamel, 2012).Most of the products released by Samsung’s

competitors are similar in design and functionality to that of Samsung products and most of

them are cheaper in comparison also. Hence Bargaining power of buyers for Samsung is

high (Gong, 2013).

Bargaining power of suppliers for Apple (High): The chips used by Apple in their products

are produced by their main mobile rival- Samsung(Hamel, 2012). This makes bargaining

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power of suppliers a huge threat to Apple. When Apple started using chips from Samsung

they were not direct competitors but currently Samsung is Apple biggest competitor in

mobile market. Apple is heavily dependent on Samsung for chips and other components

used in their products and will have to continue depending on Samsung at least for the next

couple of years.

Bargaining power of suppliers for Samsung (Low): Samsung produces most of the

components used in their products and for the components that are not produced by

Samsung, they have strong collaboration with its suppliers and even have investments in

many of them(Yu et al, 2014). Moreover none of these suppliers are in direct competition

with Samsung. Hence, the bargaining power of suppliers is low for Samsung.

Threat of substitutes for Apple (High): Threat of substitutes is the highest for Apple.

Samsung is the greatest competitor that poses as a threat to Apple in the mobile and

computer industry. Samsung is currently more innovative in terms of technology compared

to Apple and is providing good value with new products (Gong, 2013).The Apple being in the

spotlight is paving the way for rivals to aim for Apple by giving little better products than

each computer or iPhone being introduced into the market by the Apple. When Apple

launches a new product into the market, just after 2 months the competitors beat Apple by

a small margin, which forces the Apple to reinvent their products annually and with the

price of Apple’s products that customers pay, they are not always happy with what it

produces.

Threat of substitutes for Samsung (High): Any phones that functions like Samsung pose as a

threat to Samsung. This encompasses other products running on the Android OS that is not

produced by Samsung such as Motorola Droid (Hamel, 2012). Other substitutes include

Apple iPhone, Blackberry, etc. All of these products are available in high abundance with

same cost and are highly competitive.

Intensity of competitive rivalry for Apple (High): The intensity of competition in mobile

market is very high. Every new product has to compete with hundreds of other products

(Hamel, 2012). The main competitor of Apple is Samsung. Apple has a cult following because

in the past their products had vast superiority on their competitor’s products. Samsung with

the enormous success of Galaxy S4 is slowly but surely becoming a threat to Apple’s cult

status. The presence of a product- Galaxy S4- which is arguably superior to Apple’s iPhone

5S is surely going to dampen the cult following of Apple (Gong, 2013).

Intensity of competitive rivalry for Samsung (High): Intensity of rivalry high in mobile

market high due to the intensity of competition (Gong, 2013). Competition is a balanced one

as most of the competitors of have financial stability and have big market shares. The

growth of the market has slowed down and hence the need to attract customers from

competitors is also high.

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Conclusion

In the field of Consumer electronics, Apple and Samsung have emerged as the latest

renowned company. The master brain behind Apple Inc- Steve Jobs- had already taken the

company to greater heights, right from its budding stage. Samsung began as a small trading

company and later emerged as a world class corporation, especially with its android market.

Williams (2014) reports that both Apple and Samsung have been into global patent war

since 2011. According to the latest reports Apple still remains to head the smart phone

industry with its iPhone 5. The competitor to the iPhone 5 was the Samsung S5 which

considerably lost its market within 2 months after its launch. S5 offered spectacular

advances, but these advances were not just enough to head the android market in the

current scenario. The customers in today’s market are highly knowledged about most of the

technologies and hence meeting their demands and expectations can be met only by the

best R& D department, which Samsung lacks highly.

At the same time, when analysing long-term results, Samsung is supposed to head Apple in

future. The death of Steve Jobs has adversely affected the Apple Plc. And no one has yet

risen to be a substitute for Steve Jobs. The market shares of Apple are already falling from

the mid of 2014, reports Shaughnessy (Forbes, 2014). Samsung has started working heavily

on its R& D and aims to achieve the attain market dominance in this industry. So to

conclude, this study reveals that both Apple Inc and Samsung are at equal levels of

competition and are equal competitors to each other, both in long term and short term.

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