The general story about the two companies is that Apple is a design leader and Samsung is just copying what seems to work. Samsung is therefore always second to market, violates Apple’s patents but can offer similar features at lower cost. There’s a couple of details in this story that interest me though:
“Apple’s move may not have an immediate impact on sales, but the image for the new products is getting hurt,” Ahn Seong Ho, a Seoul-based analyst at Hanwha Securities Co. (003530), said by telephone today. “The news headlines are all implying that while Apple is leading innovations, Samsung just copied.”
Is being known as someone who copies all that bad though? Clearly, from a legal point of view it’s around $1 billion bad but that’s not quite what I mean. Will customers actually be turned off buying products if they think that they are copies of earlier models by another company? I’m not entirely sure they would be to be honest. Most people are perfectly happy to buy copies if they’re cheaper. There are entire industries that run on this model: fashion itself for example. The ideas that are on the haute couture catwalks this month are in the shops at one hundredth the price next season from the knock off shops and people queue around the blocks to buy them.
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There is a class of goods where the extra expense itself adds to the desirability, Veblen Goods. The very fact that they are expensive adds to the image one projects when one has them. It could be that smartphones fall into this category, that consumers do value novelty, the “original” enough that any brand thought of as a copyist will lose sales.
But it’s a difficult idea to square with the very patent system itself. We have a patent system because originality is difficult and expensive. And if anyone can just copy new inventions then we know that many people will indeed purchase the knock off: thus disadvantaging the original inventors. Given that this whole Apple v Samsung thing is about said patents I find it difficult to see that being the copyist is going to be a black mark against Samsung. After all, the very reason we have patents is that we think people will flock to the cheaper copyist.
Another story in the Samsung v Apple war very much amused me. It’s about the corporate cultures in each company. The way in which Samsung must change the way it works in order to be able to come up with new and unique designs and functionality. Apparently Samsung is simply to vertically structured, too hierarchical to be able to do this properly. One example given is that:
“I think elsewhere top managers respect their chief designer’s decision, but at Samsung, they overrule designers and have the final say about what design we go with. That limits our capability. To be better than a good fast follower, Samsung needs a more horizontal culture and to empower designers.”
One recent example of that top-heavy command structure came less than a fortnight before the launch of Samsung’s Galaxy S III smartphone in May, when vice chairman Choi Gee-sung ordered half a million blue phone cases to be thrown away as the design, with thin, silver stripes, was unsatisfactory, according to a person familiar with the matter.
After a number of tweaks, Choi approved the final design on a Sunday just 10 days before launch, triggering an initial supply bottleneck and delaying shipments of some 2 million units, according to some analysts.
That reminds me of someone. Who was it?
Just over a month before the first iPhone was to be released in 2007, the authors report, a frustrated Steve Jobs summoned his senior team.
Steve had been using a prototype iPhone for a few weeks, carrying it around in his pocket. When his lieutenants were assembled, he pulled the prototype out of his pocket and pointed angrily to dozens of scratches on its plastic screen.
People would carry their phones in their pockets, Steve said. They would also carry other things in their pockets–like keys. And those things would scratch the screen.
And then, with Apple just about to ramp up iPhone production, Steve demanded that the iPhone’s screen be replaced with unscratchable glass.
“I want a glass screen,” Steve is quoted as saying. “And I want it perfect in six weeks.”
Doesn’t look like Samsung can catch a break really, does it? If Steve Jobs stamps his feet and vetoes a design, requiring a complete retooling weeks before product launch, that’s visionary management and attention to detail. If Samsung management do it it’s not listening to their designers and being too autocratic. Just amazing how differently you can tell the same story, isn’t it?