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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.
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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?
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.
;-) But I wouldn't put too much behind a statement like "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"... The original iPods still looked, felt, and functioned much better than the competition, and after those 1.8" drives hit wider availability said competition STILL hadn't whipped up anything much that's par, let alone a few swings under.
;-)
You got that right.
Those talking about Apple's superior engineering and aesthetics still have quite the point.
Dirty? About as dirty as any restaurant that only sells Coke or Pepsi products.
Apple got Hitachi to sole-source the HDs it used in the iPod. Big woop. Not necessarily dirty. Others had their chances at a slice of the 1.8" drive, too.
And Apple agreed to buy a big-ass load of NAND chips for the Nano to very favorable terms. Again, big woop.
If you are selling a commodity product, and someone comes along and says, "Hey, I'll buy all of your production for the next 18 months," and you still make money on it, you tend to bite on it.
Since we don't know what pricing level the KTC is looking into, it could be that Apple just committed to a magnitude larger memory buy than other buyers had done up until that point. Instead of selling several lots of 1 million SKUs, maybe, at varying price points over time, Apple says, "Hey, we'll buy 10 million SKUs over the next year at $5.00/10000 (when "the market price" tends to be $5.5/1000, or whatever) with half of the total up-front, and the rest delivered monthly upon delivery...", which is guaranteed money for Samsung (and pissing off AMD, Intel, Xylinx et al).
Again, not a big deal.
Want to buy a couple of animals from a farmer, but it'll take a week or two? OK. But if someone comes along and offers to buy everything he has for sale a couple of days after you talk to him, too bad!
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.
They're a monopolist with a 3-5% market share? It may come as a surprise to you, but a company in that position cannot be a monopolist. Legally. Unfair trade practices? Yes, that could be. If Samsung sold below cost to sink a competitor? Unfair. Dumping, or something like that. If Apple somehow dictated the price to Samsung, that might be wrong. If Apple, say, threatened Samsung with being excluded from future iPods, that could be wrong. None of which is, as lawyers say, "in evidence" here. As for Apple being "just the same," well, it may come as a surprise to you, but Apple is a corporation, not an order of monks. Without profitable computers and software, they're gone. So, yeah, the computer business is very tough. But I can just tell, you mean, "Microsoft isn't so bad, Apple is just the same," and there you're wrong. Learn what monopoly is. See why the courts found it guilty of being a monopoly, and suggested its breakup into three parts, I believe. Then see if you can still say, "Apple is just like Microsoft." Genghis Khan isn't just like Microsoft. Both Stalin and Roosevelt were on the left -- was FDR just the same as Joe Stalin? Just a small contemporary example: the MSNBC channel and website. I can, on my Mac, watch CBS, ABC, AP, BBC, CNN -- all kinds of web-based video. The only one I can't watch? MSNBC. I have the Mac version of WMP. I have Flash, javascript, all kinds of stuff. But somehow, the geniuses at MS put up a a notice that their video is "incompatible with my OS." That's monopolistic behavior. By the way, the latest reorg by MS seems suspiciously like a mammoth company preparing bite-sized bits to... split up and sell. So maybe Judge Jackson was on to something.
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
As for your last paragraph, Microsoft's "superior engineering"?
I do believe he's just making wry commentary on the likelihood of their positions swapping in ALL cases. And there's certainly something to be said for that, as an unchallengable market leader tends to stagnate while the up-and-coming try to compete on whatever grounds they can.
"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
"...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.
First of all, I was incorrect. It was toshiba. It wasn't until hitachi started making 1.8 drives that someone was ABLE To compete with apple. My appologies for that mix up.
Second of all, my point isn't that this was some awful thing that Apple did. This is how business is played. It's not nice and friendly, its down and dirty, and Apple plays the same game as everyone else.
If Microsoft had used their clout to buy up all of Toshibas drive to make a slim mp3 player that took the market by storm, and companies like Apple were uanble to get any 1.8 drives to make players with your collective outrage would know no bounds. You would bitch and moan to no end that Microsoft was not playing fair. While I fully expected my original post to be unfairly moderated down (my karma can take the hit), it surprises me that so many of you could be so hypocritical.
I don't take issue, really, with how Apple condudcts itself, simply with the ultra-unrealistic impression that many of you seem to have about it. Apple is not some peace-loving commune where flower children lovingly hand-craft gadgets for your enjoyment. It's a business and it's run just like every other business.
Everytime they're accused of breaking the rules (as businesses will often do), there's a torrent of people anxious to rush to Apple's defense to tell us why it was "totally ok" for Apple to cheat. It's not ok for ANYONE, no matter how sexy their latest toy may be, to cheat wether it's Microsoft, Apple, or anyone else.
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.
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