Samsung girds for life after out-selling Apple computers
SEOUL, South Korea: Samsung Electronics’s reclusive chairman has long warned employees against complacency and obsolescence.
“Change everything except your wife and kids,” Lee Kunhee told them in 1993, charting a course that would turn a US$ 2 billion maker of cheap TVs into the US$ 200 billion ( RM620 billion) giant it is today. Two decades on, his message remains the same: “Forget about the past and start anew,” Lee exhorted employees in his New Year’s address on Jan 2. “We must search out new businesses that Samsung’s survival depends on.” That commitment to disruption has served Lee well. Samsung’s pioneering of flat- screen TVs crippled Tokyobased Sony and Sharp. Its relentless focus on chips helped bankrupt Elpida Memory Inc. Nokia’s 14-year dominance in phones fell last year. With Samsung now preparing to shed Apple as a customer as their rivalry intensifies, the Korean company’s smartphones are already outselling the iPhone and its share of the market for tablet computers has doubled in a year. The Cupertino, Californiabased maker of iPhones and iPads is already taking steps to distance itself from Samsung, according to a person familiar with Apple’s thinking, who declined to be identified because of the sensitivity of the subject matter. Rivalry in smartphones and tablets, and lawsuits in which both insist the other is stealing ideas, are undermining the relationship, the person said.
Samsung has zoomed past Apple in the smartphone market that the US company pioneered. Samsung’s market share rose to 30.4 per cent last year from 19.9 per cent, while Apple’s remained at about 19 per cent, according to Strategy Analytics.
In tablet computers, the market Apple created with the iPad, Samsung doubled its market share in the fourth quarter, to 15 per cent from 7.3 per cent a year earlier, according to IDC. Apple’s lead dipped to 44 per cent from 52 per cent.
Apple’s purchases of chips, screens and other components now account for about three per cent of Samsung’s earnings per share, roughly half the level at the beginning of last year, said Marc C. Newman, whose team of Sanford C. Bernstein analysts published a 211-page study of the Korean company in September.
While Samsung is searching out new customers, Apple has expanded its list of suppliers, according to a statement from Apple as well as so- called teardown reports in which analysts take gadgets apart to identify parts. Samsung’s reliance on Google’s Android operating system and more recent adoption of Microsoft’s wireless software also strengthens its ties with Apple’s two biggest US rivals.
“Samsung is trying to get ready for a possible break-up with Apple,” said Lee Jin-woo, who holds the South Korean company’s stock in the US$ 6.6 billion he helps oversee as a senior fund manager at KTB Asset Management in Seoul. “Samsung will make another big push into tablets, its multiple products driving sales of components and making up for any losses from Apple.” The struggle between the two will gauge not just their ability to reap the biggest gains from more than US$ 400 billion in global sales of handheld wireless devices, it also tests two contrasting business models.