Apple vs. Samsung: A sign that the Dynamics of the Consumer Electronics Industry is Changing

I was not going to blog about the big Apple vs. Samsung IP battle, as in my view IP and patent battles are only for organizations with deep pockets and that the money used to pay the lawyers should be better spent on the next big thing.
However, one evening at a recent screening of the Design & Thinking Movie we organized for our close friends, an old ally asked what I thought about Apple’s win.
I replied that it was a big win for innovation. Immediately, I wondered where that comment came from?
You see, in the consumer electronics industry there is one company everyone loves to hate. So much so that in any business or product strategy formulated, there is always a defensive plan on “what Samsung would do” and to prepare for it in a big way.
Companies constantly looked over their shoulders and hoped that the Samsung “Fast Follower” juggernaut would not be lurking too close by. A “Fast Follower” design strategy means that Samsung would pick the winners, then follow their winning x-factor but make it just a little better through product spec and design. Did I mention that they also often made it cheaper?
It is by being cheaper that’s where many of the contrarian views of Apple’s win come from.
Enrique Gutierrez, chief technology officer of Digithrive, observed anecdotally that customers at Starbucks complained that they have overpaid for an Apple product, when they can get the “same” product by Samsung at a cheaper price.
This has always been the intended outcome of Samsung’s Fast Follower strategy.
Former Microsoft employee and tech blogger, Robert Scoble writes: “I think this is actually a sizable win for Samsung. Why? It only cost $1 billion to become the #2 most profitable mobile company.”
Robert implies that through “following” Apple, Samsung has acquired market share cheaply and with little risk. Really, you can’t help but grudgingly respect what Samsung is all about.
Personally, I disagree with Enrique’s observation. I have separately observed or was told by many Samsung converts who were tempted by the larger screens, thinner bodies, cheaper prices etc. and then complain how unsatisfying the Samsung experience is. Worst still many of them could not get used the system and can’t wait for the next iPhone. (Which has just come out!)
This “same but better” is only a knee-jerk reaction and is likely temporary. When people know a better way, it’s hard to go back. And this is where a “fast follower” design strategy has its biggest Achilles’ heel. Trying to be better than the best does not always work, especially when it is not very clear what makes the company the best.
Anyways, (going back to the patent battle) while I still believe the money is better spent on R&D, the times are changing. It is getting harder to stay ahead, and you can see the strain on Apple when Tim Cook mentioned in the recent AllThingsD interview “…it is important [that] Apple not be the developer for the world. We just want other people to invent their own stuff.” I agree with his last point. There are many smart people at Samsung, and some of their designs are pretty good. But one can sometimes wonder why they don’t create their own radical breakthrough innovations? I’m sure they can well afford it.
Apple is one of the few companies who have successfully outsourced almost all their products and components, and still manage to stay ahead of their competitors. If you consider the amount of Samsung components that go into Apple products, and that many enterprising employees of manufacturing companies in China are leaking Apple parts for money, it is truly very tough to keep customers surprised and stay ahead of the competition. When was the last time you were truly surprised with a new Apple product offering?
Just to elaborate on my previous point a little more, sources close to me have indicated that many 3rd party iPhone cover manufacturers have long confirmed the iPhone 5’s dimensions and have been spewing out tons of cases in the months leading up to the launch of the iPhone 5.
So what will happen next? I’m honestly not too sure and would love to hear your thoughts. Whatever it is, the consumer electronics world is so tightly integrated these days that it will be interesting to see how things pan out in the coming months.
Photo Via: Mashable.