Apple has bought a small Austin, Tex., company called Intrinsity that is behind the A4 chip that Samsung makes for Apple’s iPad. Likewise, Samsung and Yahoo have joined to compete against Apple and Google.
Samsung vs. Apple
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{ 19 comments… read them below or add one }
Isn’t yahoo like ummm dead.
I don’t think it’s going to work.
Unless Yahoo Korea is HUGE
Good news for Samsung: Steve Jobs has let the cat out of the bag on Apple’s success.
It turns out to be quite simple advice, which can be followed by everyone. Get rid of the crappy stuff.
That means, find what your company is doing well and focus on that. Get better at the good stuff. Dump the rest. A corollary of this is, get rid of the crappy people. Don’t tolerate poor performance. Carrying underperformers brings the whole place down.
This applies to any organization, even law firms, and it’s very, very simple. Get rid of the crappy stuff. For a law firm that means the firm must identify the lines of low-priced business (hello, English teachers and your fights over fifty bucks!) which produce little revenue, while consuming tons of resources, and then stop doing that. Most firms which take a hard look at what they’re doing find that there’s a hard core of business which produces maybe 20% of revenue, but which might eat up 40% of resources. Steve’s wisdom tells us, stop doing that, and redeploy those resources to activities which will produce more success for the firm.
Apple is a workplace ruled by fear — the fear of being crappy, and of being held responsible for the crappiness.
I don’t think Samsung can emulate Steve’s advice, nor, in my opinion, can anyone in Korea. (Certainly not the Pusan Public Prosecutors’ Office.) Samsung, you see, does a great many things well, but is also full of crap. The high social value placed on relationships, and relative absence of nearly any concern about competence or even basic honesty, makes it very difficult to turf out the crap.
Samsung is still quite successful even with the crap. What Steve Jobs is talking about is how to rise to a level of excellence, rather than just being successful.
It’s not magic advice. I’ve read it in nearly every book or article I’ve ever read about business. What makes Apple different and special is that Steve lives by this principle, and ruthlessly demands the same of his employees and company.
What is “excellence?” I certainly wouldn’t call Apple an “excellent” company or its products “excellent.” Efficiency is not the only criteria by which you can run a business. What if your a company that is really passionate about X but knows that it doesn’t pay a lot so you do a lot of Y and Z in order to pay for X.
It would be nice if you could just drop the “crap” but in the real world life is a balancing game between competing values and priorities. What is “Excellence” and what is “crap” is often in the eye of the beholder.
Easier said than done. It’s not like baseball teams keep around crappy utility players because they want to. Besides, if you didn’t have the crappy members, the non-crappy members — they can get real snooty, these fools — wouldn’t have people to look down upon and thereby feel good about themselves. Feeling good about oneself is quite important, as a person like yourself MUST be well aware.
Hmnnnn…interesting. I totally misread Brendon’s post (sorry about that), but then again, if you get rid of crappy stuff, you don’t need as many crappy staff, which again becomes a problem in terms of keeping people feeling good about themselves…
Brendon,
Wouldn’t you say that Samsung and Apple are in two fundamentally different positions, however? Apple makes consumer electronics that are integrated into a single system. (Mac-iPod-iTunes-iPhone, etc.) Samsung makes everything from consumer electronics to ships, movies, newspapers, pre-packaged food, etc. It’s like comparing Jon Stewart’s Daily Show to Jay Leno’s Tonight Show. Daily Show might appear sexier, but it draws a quarter of the number of viewers as the Tonight Show when it comes right down to it.
Well, it looks like I didn’t misread the post. Damn, I just love it when I confuse the hell out of myself.
TK,
Why can’t Samsung apply Apple’s philosophy to *just* Samsung electronics, or even certain consumer electronics divisions of Samsung electronics. After all, if you can’t apply the success model of your specific industry or even do better, you are bound to fail sooner or later.
The funny thing, Brendon, that you remind me of is the time when Lee Byung-Chull decided that Samsung was producing crappy products and had his employees pile up a heap of brand new Samsung crap and destroy it, along with giving a speech that basically demanded that Samsung not produce crap any longer. That was an important moment for the company.
Just what can Lee Kun-hee pile into a heap to burn during these times I wonder? Was he alluding to something “craptacular” in his speech as to why he was returning to Samsung at this time?
Now that Apple is going to cut Samsung out of the loop, they will have to find something fresh that has no slogan or mascot and is unique in concept. There is currently no one in Samsung with such and the status quo in Korea does not encourage such either.
Well, I guess Samsung Elec doesn’t want to exceed expectations by too much in Apple’s markets, if it wants to keep Apple around as one of its key customers for the forseeable future in the component market. But this kind of industry configuration must surely go against Brendon’s unwavering belief in the righteousness of unfettered competition…
Hey, as long as they hire him by the hour when there is “friction” in the “unfettered competition” he can’t complain…
Incidentally, GE is sending a delegate to Korea to “study” the business culture and practices of Samsung and other Chaebols. Japanese and American businesses have been doing this for a while now. But I’m curious to know what GE will decide are valuable lessons to learn from Samsung? GE did very well by not completely imploding and jettisoning much of their non-core divisions. But I do wonder whether Samsung could learn more from GE’s recent experience than vice versa.
For some companies, I think Brendon’s notion would do good. But Apple and Samsung are in very different positions and I think their ambitions are very different, too. Apple is digital marketplace (books, music, aps), software, and industrial design, mostly in computing and mobiles. But, like a GE or a Japanese conglomerate, Samsung actually does have profitable expertise in completely unrelated fields that provide limited synergy opportunities. And besides making money and selling products, Samsung is also trying to develop a Korean expertise in high-tech. They have been invaluable in this endeavor. And depending on the timing of scientific advancements around the globe, Samsung is a threat to use their enormous coffers to either enter and dominate emerging lucrative industries or to get into industries, which will give them valuable research experience for Koreans, regardless of the cost, with the hope of a future payoff.
One example of the latter might be their volatile memory business. They have been the dominant player in the market for some time now. But when the market crashed at the end of the DDR2 era, this division was a huge money loser for them. But instead of leaving the market or spinning off/ selling the division, they strengthened their position instead–just because they could. I don’t know that they look at the volatile memory chip market as a source of reliable income. After all, the market behaves more like one of the commodities. And there are positive signs that the market could become obsolete within a couple of decades. So this kind of behavior makes me wonder whether Samsung has a patrician view of itself as being more of a job-provider for their Korean “children”–the plebs. But there is no doubt that their stay has helped give the Koreans valuable tech experience.
As for the prospect of losing the iPhone and iPad cpu accounts, Samsung will be fine. Moreover, I don’t know that Apple’s purchase will mean that they will want to go without any Samsung components. And it seems to me that the purchase of Intrinsity will only be useful as long as the ARM architecture is the logic of choice for these mobiles. Of course, on the one hand, ARM is likely to be around for a long long time. On the other hand, the techonological breakthroughs that will kill ARM are the ones which will allow laptop computing power in a slim iPad or mobile form factor. When that happens, there are few companies today that would be able to become the dominant players in that new market: Intel, perhaps IBM, and…Samsung. And Apple will be forced to buy from one of them.
lolla,
You took a lot of what I was thinking of saying out of my mouth. Good! Less writing for me!
You know what the ironic thing is? Samsung benchmarked GE (and Sony) in the early 2000s.
http://www.koreaittimes.com/story/8315/samsung-electronics-competes-new-world-order (paragraph 20)
lolla,
I also interpret Apple’s acquisition of Intrinsity differently. You may not remember this but back in 2008 Apple acquired another chip design firm called PA Semi. Although back then I thought it was a good strategic move, a few years later it turned out to be just an okay move. Why? The major designers and engineers of PA Semi (about 20 in all) left post acquisition. Much of the value in PA Semi thus disappeared. I see Intrinsity as Apple’s second attempt at having a proprietary chip design shop. Apple may still use Samsung as a chip manufacturing partner as they did with the iPad.
http://www.appleinsider.com/articles/10/04/21/intrinsity_likely_powers_apples_a4_ipad_processor.html
“I see Intrinsity as Apple’s second attempt at having a proprietary chip design shop. Apple may still use Samsung as a chip manufacturing partner as they did with the iPad.”
–Wangkon936
It looks like you are right. I am not seeing anywhere that Intrinsity even has a fab, let alone one capable of providing the stock necessary to run all the iPhones and iPads Apple wants to sell. What it looks like is that Apple will have their new Texan arm, Intrinsity, custom design industry-leading high-performance Cortex A series cpus, licenced from ARM, and then may still end up contracting out the manufacturing process to Samsung. Which is to say that Samsung may not even be cut “out of the loop” by Apple, as R. Elgin believes.
Moreover, it looks like this is what they did with the iPad. Like a lot of people, I thought that the iPad’s A4 is a Samsung chip. But it’s Intrinsity. Now with the acquisition, the only thing different about the arrangement may be that instead of contracting out the chip design to a 3rd party, they will be able to do this in-house, while keeping Intrinsity’s expertise out of rivals’ hands.
Wangkon936, I don’t think Apple intends to treat Intrinsity like PA Semi. It looks like they may want to let Intrinsity stay in Texas and intact.
@R. Elgin
Wiki says that Intrinsity is indeed fabless. What this may mean for Samsung is more status quo. Samsung may continue to be contracted by Apple to manufacture cpus for both the iPhone and the iPad. Furthermore, Intrinsity has been developing their designer ARM chips with Samsung anyway. We will have to see what happens with revisions of the 4G iPhone and maybe iPads 2 or more revisions from the current line to be certain. But Samsung fabs are outstanding.
And as Brendon undoubtedly knows, Apple has identified the fabrication business as not being part of their core identity. And they are unlikely to return to it. I think Samsung keeps their Apple accounts.
nonsense.
@R.Elgin
There are two terrific articles regarding Apple’s acquisition of intrinsic:
(1)Apple’s Intrinsity Acquisition: Winners and Losers–Anandtech.com
(2)”Why Apple Wants Intrinsity”–Microprocessor Report.
Ganesh at Anandtech has this to say about how Samsung may be both the big loser and a big winner:
“Of all the companies involved, it appears that Samsung’s app processor division would suffer the most in this transaction. It is quite possible that they were counting on a FastCore version of the Cortex-A9 at the 32nm node for their next generation product in the S5PC line. The online rumour mill suggests that Intrinsity had already been working on a FastCore version of Cortex-A9, but it is not clear whether it was Samsung who had requested it (most likely). The status of this FastCore after Apple’s acquisition remains unclear.
While Samsung’s app processor division could end up unhappy, things continue to bode well for Samsung’s foundry business. Apple was never likely to move away from them for future members of the A4 product line, but Intrinsity’s acquisition and their previous experience with Samsung’s process flow only continue to strengthen this belief.”
In other words, one arm of Samsung–its mobile manufacturing and mobile software designing–may be the big losers because Intrinsity was their partner in developing the brain for some of their mobiles. No other rivals of Apple or Samsung depended on Intrinsity. Apple can now cut off this partnership at that level. But because of Intrinsity’s relationship with Samsung’s actual chip manufacturing arm, the acquisition makes it more likely that Apple will continue to rely on Samsung to actually build their chips. And so, Samsung is also the big winner since the iPhones and iPads are likely to sell very well for a while.
But for Apple, Anandtech thinks as Wangkon936 does and voices doubts. First of all, Apple is bad at acquisitions and retaining talent. And interestingly, the article says that Intrinsity may not have the right kind of expertise that Apple is looking for.
We shall see.
seriously, where would Apple be without Samsung. I find it quite a coincidence to see APple’s rise being linked to Samsung being the partner for all of Apple related products.
If anything, Samsung should have complete control of the consumer electronics industry. But because Samsung is 80% foreign owned with citi group having the most share private and public, Samsung can not really decide clearly what to do that is in their best interest.
If Samsung wanted to be great, there would be complete cooperation between Samsung Display and processing division with the actual Samsung electroonics division. Unfortunately, both of these divisions are broken up so that Samsung electronics and Samsung SDI are two independent companies.
So really, any great competitive product that Samsung could have sold to the Mainstream audience could have belonged to Samsung electronics to themselves, had Apple and Venture Rock not have interfered with Samsung’s group business model.
Now am I a fan of Samsung electronics? Not really, But I do understand what is fair and balanced to what is stolen and false. And Apple happens to be the company that is bullying every consumer electronics company to their burial ground based on pure deceipt. In which Apple does none of the HARD work to actually produce technology. They are a software company. That is what they should stick to. Let widgets be sold by the OEMs like HP or Samsung and let them use Apple to develop software for it.
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