Slashdot Mirror
Korean FTC May Investigate Apple/Samsung
freaktheclown writes "Samsung may have sold Apple flash memory chips at below-market prices, possibly violating the country's competition laws. From the article: 'According to a report by Yonhap News, Korean Fair Trade Commission (FTC) Chairman Kang Chul-kyu said that his agency could look into allegations that Samsung sold the memory chips to Apple at below-market rates. Apple reportedly grabbed a significant share of Samsung's flash capacity in order to introduce its new iPod Nano. Analysts also speculate the computer maker got a significant discount from Samsung in order to hit the Nano's $199 and $249 prices.'" Adds a new layer to a previous story, eh?
The "article" on the blog this story points to is full of "may" "could have" "possibly" and other weasle-word disclaimers. Nothing to see here.
planet texture maps and more
> Analysts also speculate the computer maker got a significant discount from Samsung in order to hit the Nano's $199 and $249 prices.'"
They can speculate that all they like, but the $199 2GB nano has Toshiba chips, not samsung.
Try again.
Does this imply the memory chips are being sold at an inflated rate?
Price supports for memory chips in Korea?
Physics is like sex: sure, it may give some practical results, but that's not why we do it.
Don't most - indeed, if not all - electronics suppliers give substantial volume discounts? I'd say buying up 40% of stock would qualify for a discount. IANAL, but I don't see why that is an issue.
I may be stupid, but how does it "add a new layer"? If Apple is to buy a very substantial amount of Samsung flash chips (40%?) then what's in it for Samsung to sell it at "below-market prices"?
Also - WTF is "below-market prices"? I believe that does not mean that Samsung is gonna sell it at below the cost to produce, no?
have gotten at leas one thing wrong
"Analysts also speculate the computer maker got a significant discount from Samsung in order to hit the Nano's $199 and $249 prices"
the $199 model uses flash chips from toshiba (2* 1gb) whereas the $249 model uses flash from samsung (2* 2gb)
When the ipod first came out they used their buying clout/muscle to ensure they were the only ones able to buy Hitachi's supply of 1.8 inch hard drives. Sure there were other companies that could have made products to compete with the ipod. There's a reason Apple was the only one to put out a small/sleek player when everyone else was still putting out clunky nightmares and its not becuase Apple is the only company to employ competent engineers -- no one else simply had access to Hitachi's hard drives to make it possible.
Legal? Probably, I am not a laywer. Dirty? Hell yeah. That's business. What baffles me is that some of you out there seem to think that Apple is somehow above the fray. That while every other large coorperation will lie, cheat, and steal to get ahead -- Apple is somehow different.
I'm sure I will get moderated down by some of the rabid Apple fanboys out there, but the fact of the matter is that Apple is NOT different. They make some lovely products, but at the end of the day they run their business just like everyone else. If Mac OS had become the dominant platform back in the day instead of Windows, you'd all be talking about Microsoft's superior engineering and decrying Apples anti-competetive tactics.
Is just as out of touch and unlikeable as the other FTC
There is truth in humor.
Can someone explain to me how this is reflects badly upon Apple? I'm asking sincerely. When I go shopping I look to find the cheapest price. Seems as if Apple was just doing the same. If they can negotiate a better rate from Samsung, I'd consider it foolish not to. It more sounds as if Samsung might have broken some Korean law, no?
Aside from Apple's competitors complaining, where exactly is the monopoly behavior, or the unfair business practice? I'm no expert on Korean antitrust law -- I know zero -- but if it's like our monopoly law, then nothing wrong happened. A successful maker of mp3 players went to the maker of a new kind of memory -- or at least, very good memory -- and asked for a huge purchase. Samsung sold it at a discount, by which I infer there were competitors to whom Apple could also have gone, and they wanted the big sale. Samsung will make more of this memory, and I imagine the other 60% of the stock is also for sale to the other companies. So, what's the monopolistic practice? MS was nabbed because they told computer makers, install our OS and you must also take IE and keep Netscape, etc., off of your computers, or we will stop giving you a price break on Windows. This is using market power to compel another company to exclude your competitor. Apple buys a heck of a lot of memory and will no doubt be back for more, because the nano is selling like, er, nanos. Did they say, "And don't you dare sell any to Creative?" Another instance of possible monopolistic practice is what AMD alleges: that Intel forces Dell and other makers to sell only Intel-based computers, or lose their discount. See? Less competition. Unfair practices. But unless there's some secret coercion involved, and it's not obvious here, then Apple and Samsung have just committed capitalism. The company at the top of sales bought up a sizable number of chips. They had the money to plunk down, and the maker of the chips said, here, thank you. Competitors are upset, I suspect, because they can't keep up with the big dog. Boo-hoo.
Who cares what rate you sell at, just as long as you don't sell at a loss. At least that's what I thought was how you made profits: lower prices than your competitor. Or have we entered the world of Atlas Shrugged, where one cannot compete on quality or price?
Funny how something paraphrased can become watered down..
Nothing will happen anyway. No country is going to be stepping on a big company like Apple. They will bend over backwards to Apple's patronage.
It's Toshiba, not Hitachi.
Apple has never used Hitachi 1.8" drives in iPods. Rio did, in the Karma.
And there were no other drives available because Apple was buying them as fast as they could be made. That's the only reason. The drives were available before the iPod came out (in 2.5 and 5 gig configurations), so anyone could have got them. And anyone perhaps could have gone for an exclusive. But they didn't, Apple did. Toshiba could have made an mp3 player of their before Apple made the iPod (they made one later instead).
You're off your rocker. Even if Apple is the only one who could get these drives, that's not even Apple's fault. Any company would like an exclusive. It's Toshiba's fault for granting them one.
Apple innovated a lot with the iPod. A company that was there before Apple like Creative or Archos could have made a device with the 1.8" drive before the iPod even came out. They didn't. That's the Apple difference.
Anyway, I thought this horse got beat to death when Apple killed Mac clones. Is there really anything left to be said about Apple's willingness to compete as a commodity after that?
http://lkml.org/lkml/2005/8/20/95
Remember, everything looks different in the eyes of a Korean. Literally. They see everything in 16:9, as opposed to 4:3.
It's the market economics for you, as simple as that. SJ probably called up Samsung and said, OK folks, I'm ready to buy a shitload of 2GB chips, and I do mean A SHITLOAD (ten million), what's the price you can offer to me so that I don't go to Toshiba. And they made an offer SJ could not refuse.
Now imagine Cowon audio (BTW, what's up with their company name? "Cowon"? Hello?) calls up and says, we're ready to buy ten thousand chips. Of course there will be a different price than for ten million chips! And it of course will be a lot higher, because 10K chips is like a single batch, whereas 10M chips is two years of non-stop production.
Samsung sold lots of chips to Apple. If it was price-dumping, they lost lots of money.
Nobody else was willing to sell chips at that cut-throat price, so nobody else should care.
Lots of people bought an iPod for a good price. They are happy now.
If any company should in the future sell chips for another price, where's the problem? It's not that the sale by Samsung will forever result in Samsung having a monopoly or anything. Seriously, maybe they even LOST money...
Not below cost, "below market prices"?
If selling below market prices is illegal, how do market prices ever fall?
http://lkml.org/lkml/2005/8/20/95
I was actually wondering about this. If you look around, you'll find that the 4G Nano is amazingly cheap--cheaper than 2G flash players from manufacturers that are usually much cheaper than Apple.
However, Apple may have been able to get such a discount legitimately: usually, the price of chips like this falls because manufacturers need to recover their initial costs; if Apple's contract lets them do that through a sufficiently large initial volume, it may have made sense for them to go for it.
Still, if Apple gets conditions that are much better than those for other manufacturers, that is a concern. If Apple manages to grab a big chunk of the production of high capacity flash chips at a low price, then it may be hard for other manufacturers to stay in the market. You may like iPods a lot, but it would still be good to have competition. Some of the other manufacturers of flash players offer better battery life, real-time MP3 recording, MPEG4 playback, and many other features that Apple just doesn't have in the Nano.
When you buy enough of the chips, you are essentially paying for the raw materials only, plus whatever wear and tear you've got on the factory. This is because another way to get the same thing would be to rent a factory for the time period, buy the raw materials, and run the equipment to produce the finished goods. If the price asked for diverges much from the alternative, you'd take the alternative -- e.g. you'd see Apple renting a factory for a few years, and renting staff and IP in order to produce the goods.
However, I can't for the life of me figure out why the Korean FTC would have a problem with Samsung. I have to figure that Samsung peeved someone in the Korean govt. (or US govt.) and someone with a political beef with Samsung is making up some ridiculous charges. Because it boggles the mind why Samsung would do something so awful for business like selling crap below market.
The only scenario like this that I can see is that having a guarantee of massive volume from Apple allowed Samsung to invest even more heavily into their production, putting them ahead of their competitors. So they figured, "even if we lose a bit on Apple, we'll get our costs per item lower so we'll survive the coming price war."
http://www.thebricktestament.com/the_law/when_to_
In Korea, only old people use discounted iPods!
Never attribute to Hanlon that which can be adequately attributed to Heinlein.
Kim Jong-il changed his mind.
What was your username again? -BOFH
"Selling under market price" OTOH is what the free market is all about: if Samsung can produce more cheaply, they should be allowed to sell for less, too. It wouldn't be their fault if their competitors where too expensive.
The thing here is, these articles about Samsungs competitors' complaining have been going round almost since the launch of the Nano. And never did they contain anything about "dumping", only about "Samsung selling at too low prices for us". This sounds like they
a) sold their flash drives etc. at inflated prices and
b) are now asking for help to continue doing that.
If that's the case, I cannot find any sympathy for them.
How would you feel if you were an IT technician, and a big corporation started supplying IT services in your home town for $5 an hour.. then after you were driven into bankruptcy, started raising its prices back to industry norms?
Firms are required not to subsidise their products as allowing goods to be sold below cost gives the big industry players a chance to bankrupt their competitors: You know, like what Microsoft did to Netscape....
I have been a user for about 10 years. This ends Feb 2014. The site's been ruined. I'm off. Dice, FU
A sale defines market price - pure and simple. Buy a shitload, and the marginal cost decreases - a bulk discount - just like Dell gets everyday. As Toshiba is in the equation, they must be neck and neck, price wise, so no issue - go home. Could it be Samsung is just passing on technological savings, rather than pocketing the difference - which is the whole reason why Intel decided to stay out of the cutthroat memory manufacturing game.
The typical Korean household wakes up in Samsung furniture, cook breakfast on Samsung appliances, drive to work in Samsung cars (insured by Samsung insurance) to office buildings owned by Samsung, and use Samsung equipment to get work done. They may take vacations at a Samsung theme park and stay at a Samsung Hotel...etc. etc. etc.
I can see how politicians can be afraid of this situation as well.
-- "This world is a comedy to those who think, a tragedy to those who feel."
"...allegations that Samsung sold the memory chips to Apple at below-market rates"
Doesn't the fact that a company was prepared to sell 10 million chips at that price make that price the "market price" for 10 million chips? How else do you define a market price except as what a seller and a buyer agree on?
Unless Steve Jobs used a focused Reality Distortion Field or blackmail to get the deal, I don't really see the problem. Unless (shock horror), CNet is misrepresenting the story again.
Perhaps the issue at heart here is not that Apple bought chips at below market levels (Yes, I've seen the Toshiba posts), but perhaps that some Korean company has complained (lobbied the government) that they now are having to buy chips at an increased rate and the christmas goodies are not in jeopardy.
This seems more likely to me.
I'm sure apple has bought futures on flash and can ride out any price differential, just like the smart airline companies (should) have done with jet fuel (not American, United, Southwest etc).
I'd be surprised if apple does not have people that work global analysis of such purchases and buy up options.
I know I would if I were buying up 40% stock of flash from some companies.
If it were me (and I'm not a finance person) I'd buy up options on more than I needed and sell those options at many times the face value once the world realized (as we approach christmas) that there is a shortage of flash because "apple" is buying them all. I bet Apple is not only making $199 on your ipod nano purchase, but also a few extra bucks per nano on the futures market just because your ipod is sucking up flash.
I wish I'd taken finance at school instead of dicking around with a liquid lunch and an irrational particle accelerator.
This story? The article contained within simply points out the fact that it still costs Apple only $90.18 to make the Nano. And I'm going to assume that this price is based on "analysts" cost review at "market" pricing.
So now for "analysts" to speculate that Samsung sold Apple flash memory at a discount, couldn't they have speculated the converse -- that Apple reduced its profit margins to enter a different market that's held pretty well by iRiver's and other flash MP3 players?
It makes room for one of two things. That "analysts" are right in both cases, or they are fucking morons. I am leaning to the latter, myself.
The price is always right if someone else is paying.
Article test:
Korea's top antitrust regulator reportedly said on a local radio show that authorities there may look into whether Apple's purchase of flash memory from Samsung Electronics may have violated any of that country's competition laws.
According to a report by Yonhap News, Korean Fair Trade Commission (FTC) Chairman Kang Chul-kyu said that his agency could look into allegations that Samsung sold the memory chips to Apple at below-market rates.
Apple reportedly grabbed a significant share of Samsung's flash capacity in order to introduce its new iPod Nano. Analysts also speculate the computer maker got a significant discount from Samsung in order to hit the Nano's $199 and $249 prices.
An Apple representative did not immediately have a comment on the report.
Now, forgive me, but what is newsworthy about this? Not only is it heresy published on a blog, but it's not even saying anything definite.
I (and I'm not alone here) would hope that Apple got a damn good break on the price for buying the flash in the kinds of quantities that they will need to satisfy demand for the Nano.
Specialist Mac support for creative pros, Melbourne
My guess is that US based memory maker Micron filed a complaint because they lost the bid. They've done this in the past.
The complaint isn't against Apple. They are allowed have a discount if they want. The potential monopoly is Samsung. Their position within the market is strong enough to start a price war. By cuttings margins (but still covering R&D costs) they can achieve significant economies of scale and price their competitors out of the market for flash. Pretty soon the competitors won't be able to keep up with Samsung and they will cease investing in improving flash to the same extent.
Apple are guarenteeing Samsung sales and removing investment uncertainty. Means that Samsung don't have to worry as much about oversupply. Neither Apple nor Samsung will get into trouble about this but the publicity is doing them great. Anyone who tries arguing that the nano is pricey is gonna look foolish with Apple supposedly selling TOO CHEAPLY.
You can't buy that kind of press!
If buying flash memory at $10/GB is wrong, I don't want to be right!
Chances are good that it's not Apple that's in trouble with the Korean FTC, it's Samsung. Chances are also good that it's not just this one deal, but this is one deal in many that show Samsung's anticompetitive (as defined by the Korean FTC, keep in mind) practices. And at this point, Apple probably doesn't (and shouldn't) care, other than to make appropiate second sourcing options available to prevent supply line issues. These should already be in place anyway, and perhaps they need to do nothing but wait for the hammer to fall.
-Adam
Personally, I prefer to think that this whole thing was heresy.
The CB App. What's your 20?
First, you should know that the other companies, such as Cowon (never heard of?) or Iriver (maybe?) doesn't buy something like 10k flashes, they buy MILLIONS of them. Although that's still a lot less than Apple's product, that's still an awful lot of chips. You should know that iPod's market share in Korea is completely disappointing, http://www.cdfreaks.com/news/12253
and companies like iRiver still sells millions of players every year.
The Korean manufacturers claim that Samsung never sell flash memory chips directly to them, no matter how many chips they buy. (unlike Apple, which gets flashes directly from Samsung) Adding an additional layer on sales means more cost. Additionally, they claim that Samsung never ever sells 2Gig chips to any Korean mp3 company, no matter how much they pay. Though I don't know much about Korean law, but they claim that it's against the Korean law (Looks like some antitrust/fair trade bill).
The second problem is that there is a serious flash shortage (probably due to Apple's nano), and many companies (especially smaller ones) claim that they are treated unfairly, compared to the larger corporates.
What the Korean mp3 companies, plus many other people claims is that Samsung's strategey to sell flash chips with near zero margin, or even with loss, is:
1) Kill hard disk companies, such as Toshiba or Hitachi, that sold disks to Apple. Note that Samsung also sells hard disks, and pressurizing competitors HARD will definitely be good for Samsung's hard disk business.
2) Suggest an appealing price to Apple, and lock them to flash-only players,
3) Kill the local mp3 business, and kill competition in Korea. That will help Samsung's mp3 business (plus, the cellphones with mp3 player capability). After all competition is gone, they can deal with Apple by stop providing flash with huge discounts.
Although none of these claims are proven to be true yet, it's clear that the Samsung-Apple deal pressurizes both hard disk manufacturers and mp3 player manufactures.
Your father MAYBE having sex with a goat.
OMGWTFBBQ !!!!!
All Samsung needs to do is create a new Bulk Purchase category. When you buy all our chips, you get this price!
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
How would you feel if you were an IT technician, and a big corporation started supplying IT services in your home town for $5 an hour.. then after you were driven into bankruptcy, started raising its prices back to industry norms?
... ?
And how is this different from K-Mart, Walgrens, McDonalds, Taco Bell, Circuit City, Kroger, Ace Hardware, 7-Eleven, Costco, Smart & Final,
Been to a little mom-and-pop store lately?
When was the last time you got your latest home computer from a little guy who assembled it in the backroom of his storefront?
(I imagine most of the current generation has no idea how retail USED to be before the advent of the branded discount store chains. Or of the anti-chain-store legislation that led to the "membership buying club warelhouse" stores as a workaround.)
Meanwhile, if the accusation is selling "below market price" rather than "below production cost" they've got a hard road to hoe. For starters they need to show what the "market price" IS for orders that size. How many of them are there? Samsung can defend simply by publishing the same price they gave Apple as "list" for orders at the nearest round number less than what they shipped to Apple. B-) (And you get your place in the allocation list right behind their existing customers.)
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
I know I shouldn't reply to a troll, but on the off chance that anyone's interested, Paul Graham wrote an essay on the unpopularity of nerds.
they should merge, samsung had the yepp player out well before ipod which was actually more compact. apple is the great packager, while samsung is the woz. do it!
... check out The Center for the Advancement of Capitalism - Anti-Trust Resources.
They might say Toshiba, but that does not mean it isn't Samsung. That's why it's called the Toshiba Samsung Storage Technology Corporation.
http://www.tsstorage.com/index_e.html
Blacker than my baby girl's stare. Black like the veil that the muslimina wear. Black like the planet that they fear...