A little diversion from the beef/candlelight vigil/LMB mess. Today Apple announced their 3G iPhone and a huge price reduction, from $400 to $199. The new 3G iPhone will have faster Internet access through a 3G network, real-time GPS, longer battery life and email sync (a la Blackberry). As mentioned here, Samsung and LG has spent the better part of 2007 and 2008 playing catch up. With the new iPhone, they are behind yet again (but were not really at parity anyway).
Reviewers of the iPhone and the “iClones” have noted that the iPhone’s advantages do not lie in technology, Internet speed or even asthetics. Turn off a Samsung F700 and an iPhone and you get two pretty much similar looking monolithic black rectangles. The iPhone’s real advantage lies in its intuitive and elegant user interface. Samsung and LG’s latest offerings have user interfaces that the cNets and engadgets of the world describe as “clunky” and “cumbersome.” So, it isn’t in the guts or the looks, the iPhone’s true advantage is in its software.
Unfortunately, companies like Samsung or LG are not “hard wired,” if you will, to be creative from a software standpoint. This weakness that is laid out in painful detail in the following Popular Mechanics article, where it says the real battle for cell phone supremacy will likely be between Apple and Google’s upcoming phone, not Samsung, LG or Motorola.
Per the article:
While companies like Samsung, LG and Motorola are used to fighting it out over handset design and built-in features, dutifully serving a range of niche customers while stumbling toward the next RAZR, beating the iPhone will mean excelling in an arena where phone makers have generally failed: software. (Emphasis mine)
Furthermore:
It’s not that a touchscreen phone’s hardware is irrelevant…. As iPhone competitors like the Samsung Instinct and LG Vu enter the market, it’s been clear that the interface is what sets one model apart from another… So even on a cosmetic level, the touchphone war will be fought with code. (Emphasis mine)
To be fair, Korean technology companies have tremendous engineering firepower coupled with strong (and in LG’s case, industry leading) aesthetic design. Quarter by quarter companies like Samsung introduce the world’s fastest, smallest, lightest, brightest, thinnest, etc. microprocessors, flat screens and cell phones. However, as long as Korean companies lag behind in terms of the software that tells the hardware what to do, expect the under the table paid chaebol cohorts, errr… I mean government officials to keep the iPhone out.
Oh, by the way, Samsung announced the launch of the Omnia, yet another touchscreen phone, a day before Apple’s announcement. It matches the iPhone in most technical aspects, but it sports a 5 megapixel camera with autofocus, flash and face recognition software. Given these features, Korean manufacturers still have a chance to use their pure engineering prowess to eventually match the iPhone. However, since the Omina has an odd mix of user interfaces, Windows Mobile 6.1 and Samsung’s Croix mashed on top, my money says that the 3G iPhone still has it beat.
28 Comments
Oh, I apologize in advance for such a long boring ass blog entry…
As someone with an iPhone once put it, it’s just ‘fun’ to use an iPhone. And I think this is a concept (fun = not necessarily teched-out) that both Samsung and LG seems to have trouble grasping. Their approach so far (to my completely untrained eyes) seems to be to match or try to outclass the competition with abilities rather than design. But who cares about slow internet (which apparently isn’t an issue anymore) when iPhone is just… cool?
As for me, I am more than satisfied with my Blackberry Pearl, which lets me type faster than on keyboard.
Samsung backed governmental exclusion of the iPhone 2 is yet more Korean protectionism, which results in second rate quality at exorbitant prices, and drags Korea even more behind the global action. The same process is happening with beef; discredit the competition, wave the flag of nationalism, and make sure the consumer pays more for lower quality products. And with the educational system, which protects the incompetent while discriminating against the able and the genuinely qualified. Korean society has a genuinely amazing capacity to shoot itself in the foot at every opportunity.
#3
I don’t think I could have summed up modern Korea any better.
Kudos.
Good news. I maintain a Motorola phone simply because it’s not a Korean product.
I don’t believe in supporting trading nations that are anti-American. I believe it is the height of hypocrisy for Korea to suck the blood of US consumers while vehemently resisting the import of US products.
It is my hope that the AVERAGE US CONSUMER will learn a bit about Korea and have the self respect to think twice before buying a Korean product. Of course that’s unrealistic because only North Korea makes the US media.
As a boycott of Korean goods cannot be expected, there are two other scenarios that can limit the import of Korean goods:
1- Protectionism: Free trade agreements have hurt the US economy and it is likely that Korea may face more trade restrictions rather than an FTA; Auto manufacturers could successfully lobby for higher tariffs on Korean vehicles.
2- Exports from China: They should eventually replace Korean cell phones and possibly flat screens.
3- Economic factors: Right now, retirees on a fixed income, lower socio-economic consumers, tight-budget students etc, are buying Hyundais and Kias for their price, warranty and gas mileage. Economic recovery, decreased gas prices will adversely affect the sale of cheap Korean imports.
“I don’t believe in supporting trading nations that are anti-American.”
… so, how’s that Saudi gas doing in your automobile?
Homer Simpson put it best:
“I never dreamed an American car designed in Germany assembled in Mexico with parts made in Canada could be so amazing!”
You know what’s as stupid as nationalism-induced trade barrier? Anthropomorphic viewpoint on international trade.
Ah… Saudi gas. You know like 18 of the 22 or so terrorists that slammed their planes into the twin towers were Saudis.
The problem with beef is not the flag waving nationalism. It’s the leftest protectionism/populism/know-nothings just like USA.
Only 10% US oil supply comes from Saudi’s and Middle east.
Economic decisions based primarily on nationalistic concerns is just a bad idea on both ends of a border.
“in the following Popular Mechanics article, where it says the real battle for cell phone supremacy will likely be between Apple and Google’s upcoming phone, not Samsung, LG or Motorola.”
That’s a bit of a stretch. According to Apple, as of Jan 2008, around 4 million iPhones have been sold. So that’s probably between 4~5 million for one year. Samsung sold over 160 million phones in 2007. So while Apple is doing very well in the “smartphone” area, the majority of the world is not buying smartphones and probably wont’ be for many years to come.
Okay,
Steve Jobs is the motherf’in man! This guy is just freak’in awsome.
Case in point: Apple’s products, including the iPhone and iPod, require Samsung chips such as processors and flash memory. In some cases Apple has helps develop the chips with Samsung or at least provided direction into how the product should perform, etc.
Well, the forward thinking Mr. Jobs has bought a chip design and manufacturing company called PA Semi. Per an Apple Insider article:
Thus, in the near future, Apple won’t buy any chips from Samsung and just source them in-house. That’s additional revenue and profits directly into Apple’s pocket and not Samsung’s. Yes Samsung may do some job shop work of making commodity chips, but it’s days as making the specialty chips for Apple (currently a major consumer) may be numbered.
You have to appreciate this man’s vision and forward thinking, strategic planning. It’s very unAmerican. Usually American companies build something, rest on their laurels and let the Asians (or other competitors) catch up and surpass them. This is what happened to Motorola, GE Appliance, and all the Big Three Detroit automakers. But Steve Jobs isn’t going to let this happen to Apple. America needs at least 10 more chief executives just like him.
What Samsung should do is go out there and buy an innovative software company, given that their ability to write easy to use software is so underdeveloped. However, M&A savvy is not a Korean strength yet. Samsung will probably bang their heads against the wall with
slave labor chained to their cubicleengineers in Suwon to come up with a clunky and cumbersome response.# 10,
Okay, then it’s really “cell phone TECHNICAL supremacy.”
But does Samsung and LG want to fight it out w/Nokia and Sony Ericsson for the commodity rung of the market? Phones like the Blackberry and iPhone are very profitable, much more so then the lower rung of the market. LG and Samsung really have to ask themselves if they want to play with the big fish or keep fighting based on price and “cuteness.”
And what’s the point in making 160 million phones if you are only making a nickle on every dollar whereas with products like the Blackberry Curve or iPhone you are selling less but making two dimes on every dollar?
#12,
Nokia makes a pitance in profit on unit sales in the developing world, but because they control over 34% of the world market, those pennies add up very quickly. Samsung will surpass Motorola in units sold in the US in 2008. Again, the profit margin per unit will be less than that of the BlackBerry or iPhone, but the overall profit is much higher.
In the world of cellphones, Nokia and Samsung are THE big fish. That won’t change anytime soon. Sure apple makes a great, cool, product that people love, but it all comes down to units sold. It’s like comparing Honda with Ferrari. Everyone aspires to own a Ferrari but it’s the Hondas that are selling like hotcakes.
If anyone should worry about Apple, it’s RIM, not Samsung, Nokia, or LG.
Well, even Honda has Acura which contributes a good chunk of cash flow. That’s what higher end products do, provide more cash flow for less effort. Toyota has Lexus, GM has Cadillac, etc. You need to move upstream in the product chain or else you are working your ass off for those pennies. Besides, who knows what’s in Steve Jobs noggin? Maybe he’s got a mini-iPhone in the works that will compete at a similar price point with the Nokia’s and Samsung’s in the world? Samsung and LG should still beef up their software and UI design capabilities as a hedge.
Yes, RIM should worry more than the other players you talked about IN THE NEAR TERM… Apple is looking to be a general consumer electronics company on their own terms. Samsung and LG are not in the cross hairs yet, but they will be.
Indeed Samsung, LG, Nokia, Moto, and all the other major cellphone producers need to make drastic improvements to their s/w and ui; and I would venture to guess that most are trying to do so now. There is a lot to be said though about selling more units with a smaller profit margin. Look at Walmart or McDonald’s.
In the cell phone industry, it really is all about market share. So while Apple may have a better product, they are in a niche market. A mini-iPhone would be cool but it would still only be in a niche market for the time being because the network infrastructure doesn’t exist in the BRIC countries or the rest of the developing world, which are where major profits are made.
Apple has amazing potential to make a big wave, but I wouldn’t discount any of those other players either. A lot of the design and development work for Samsung is happening in their US r&d labs these days. Two of Nokia’s r&d labs in the US are partnered with universities, one connected to MIT and the other connected to Stanford.
It will be interesting to see what will come next. Steve Jobs is great but I’m not ready to call him Midas yet.
I feel bad for all the people who bought the iPhone in 2007. They basically bought an overpriced beta product. But that’s where having a “fan” base that will gobble anything you make and worship your products with cult-like devotion helps.
WangKon — PA Semi is fabless, which means Apple still needs to source finished chips from somewhere. The company needs a production partner for its designs with large, unused fab capacity for other people’s designs. Samsung excels at exactly that — it has next to zero independent development capacity, but man, does Samsung churn out chips. Like a headless horseman.
As for feeling bad for iPhone early adopters, they did get the enjoyment of using the iPhone for the last year.
yt — Per your assertion in #10 that smartphones are a small slice of the overall mobile phone market, wouldn’t you agree that price has been part of the barrier to wider acceptance? At $599, or even $399, that’s an expensive phone. At $199 iPhone is still not exactly an impulse buy for most of the 70 countries where it will be available, but in the developed world $199 makes the iPhone exponentially more appealing to consumers of the so-called “dumb” phone.
Apple is going to sell a hell of a lot more iPhones in 2008-2009 than in the previous period, during which the iPhone sold nearly 10 million.
Once Jobs & Co. can bring the price point down to $99, which is inevitable given technology pricing, Apple might end up the world’s #1 phone maker. The Korean ones, in particular, will be vulnerable because of their cluelessness on software.
Apple’s core competitive advantage is user interface design. Its lever into all manner of devices will be the foundation of OS X, based on Unix and open-source software, and Apple’s excellent software-development kit which makes programming a joy for developers.
I still think Apple TV is going to be something, and the iPhone could end up being the world’s dominant mode of Internet access. Plus, that Mac market share keeps on rising sharply.
http://www.nytimes.com/2008/06.....ue.html?hp
Basically repeats what Wangkon said. That’s pretty good, I think.
In the US, iPhone only works with AT&T. Subscribers to Sprint, AirTouch, Verizon, etc, cannot use iPhone. Most of subscribers have signed multi-year contract with these companies and, however superior the iPhone may be, they cannot switch to AT&T without paying heavy fine.
Steve Jobs is a loser. He does not know how to sell. If he sold the phone in all the other companies, he would have made real big bucks.
Limited to AT&T only, Jobs will lose. Samsung, LG, Nokia and Motorola still can beat iPhone.
Brendon,
Reread the article. You are right, they don’t appear to do any manufacturing themselves but it looks like a design house. Still a brilliant move. Apple designs their own chips that fit their products the best. The article also mentioned that it will eventually hurt Samsung and Intel in that it won’t use it’s premium chips so one is lead to believe that they will do lower margin fab only work.
Sounds like it’s an acquisition that Samsung should of done instead, however there is so little M&A innovation among Korean companies with the exception of STX and Infracore. Most don’t see the value in M&A, which is unfortunate.
Steve has big ego.
He thought iPhone is so good that people will pay the fine (about $200) and buy the phone for $400 and sign up with AT&T.
Wrong!
He had to lower the price to $200.
WangKon — I think we may be talking across each other. I know PA Semi is a design house, which portends Apple designing its own semiconductors and ASICs, but at the end of the day once those chips are designed, they have to go to someone’s fab. Might just as well be Samsung’s fab.
baduk — If only that loser Steve had access to your brainpower.
baduk’s comments are a waste of electrons…
http://www.theonion.com/conten.....hone_rival
Brendon #17,
going down on the price isn’t the only factor in making smartphones more appealing. correct me if i am wrong, but it’s my understanding that the network infrastructure needed to make full use of the iphone does not exist in the developing world. it will take a long time for that to come about.
it’s easy to discount the lack of sophistication in korean s/w but the same could have been said 5~6 years ago about their h/w. a large amount of samsung’s developing technologies are coming out of the labs in the us, where the majority of the workforce is not korean.
i have a hard time seeing apple as the number 1 cell phone manufacturer in the world. they currently have 1 product. even if they “mini” it, it still isn’t something that fits all people. nokia, samsung, lg, sony ericsson… all release 20~30 products a year in order to satisfy a diverse customer market.
lack of infrastructure, lack of product diversity, high price… i’m not convinced of world domination yet. but as i own apple stock, i would love to see it happen! and i certainly wouldn’t pass up an iphone if given one.
Interesting news from Nokia… they bought Symbian, a mobile application software company. It seems that at least one other mobile phone company knows that the future is in software development and not just engineering and manufacturing.
Samsung should buy Opera, (and offer a price that they can’t refuse) but… they probably won’t…
The Daily Register has an analysis of Nokia’s move.
Apple doesn’t have the corporate genes for world domination. Just look at the botches at the latest iPhone launch. Apple cannot scale up to the same degree that giants like Microsoft and Samsung can. The flip side is that Apple makes products that actually rock.
I’m a former Apple employee. These are just the facts of Apple.
Apple will always be like BMW. Not for everyone. Only for those who are worthy