Samsung Hits Apple With 20% Price Increase

EthanV2 writes "The Wall Street Journal cites a report which quotes a 'person familiar with negotiations between the two tech giants,' apparently confirming this special price hike for Apple. The source said: 'Samsung Electronics recently asked Apple for a significant price raise in (the mobile processor known as) application processor. Apple first disapproved it, but finding no replacement supplier, it accepted the [increase].'"

Comments

one word

[magsol]

pwnd

Re:one word

[Anonymous Coward]

NO WTFPWND!

Re:one word

[Anonymous Coward]

In India, we call it KLPD. Apple lost all the way, and Samsung recovered what they lost elsewhere.

Re:one word

[Anonymous Coward]

pwnd

partial-pwn only. For a complete pwn they would need the ability to prevent them from producing their product at all.

Re:one word

[michelcolman]

Apple has quite a few patents on overcharging for products, I wouldn't be surprised if Samsung were violating one of them. This isn't over...

Re:one word

[Penguinisto]

Well, "pwnd" until another supplier shows up to provide the goods, or Apple funds a new one into existence.

After that, Samsung loses the contract once and for all.

There's a difference between doing business, and killing the golden goose out of childish motive.

Re:one word

[Anonymous Coward]

If by 2014 (the time the current contract runs out), Apple doesn't find another supplier, manages to make their own or changes the product to no longer need them, Samsung could, indeed, prevent them from producing their product at all, by simply no longer selling them that processor. Of course that would also mean Samsung wouldn't get the revenues from selling it, which probably isn't in Samsung's interest.

Re:one word

[Anonymous Coward]

There's a difference between doing business, and killing the golden goose out of childish motive.

That goose isn't quite so golden anymore. Samsung has the upper-hand; and the time to strike is while the iron is hot. Samsung is right to go for the kill.

Re:one word

[gstoddart]

After that, Samsung loses the contract once and for all.

I believe Samsung has already told Apple they'd be terminating the contract next year or so ... so it's not like they're at risk of losing a contract they've already decided they don't want any more.

Re:one word

[somersault]

Why? If Samsung can make money from iPhone sales, why would they want to stop the sales completely?

If Samsung caused the cessation of iPhone sales altogether, iPhone customers might move to a brand that doesn't use Samsung parts at all.

Re:one word

[poetmatt]

There's a difference between doing business, and killing the golden goose out of childish motive.

you mean like apple trying to sue android, for instance?

Re:one word

[hattig]

I'm sure Samsung would be happy to continue manufacturing for Apple, as it is still income.

But maybe this is flexing some of their muscles to fire a warning shot over to Apple about Apple's recent lawsuit games. On the other hand, this is the first price rise for Apple in five years of manufacturing (where I imagine pricing is on a per-wafer or per-mm^2 basis - not clarified).

It's not hard to imagine that 32nm is more expensive, and that inflation over that time will have raised costs as well, that Samsung have merely invoked a five year price review clause in their contract with Apple to raise pricing to a reasonable level for the next five years.

Re:one word

[Vapula]

And, if I remind well, Samsung is/was also a major supplier for LCD screens for Apple... Which are much more expensive than the processor...

And LG (one of the Apple suppliers) is not feeling well...

Re:one word

[t0rkm3]

I prefer to call this, "Don't shit where you eat."

Re:one word

[dintech]

I wonder if the price hike equates to about a billion dollars...

Re:one word

[oxdas]

All of Apple's contracts combined (display, processor, memory, etc) only account for about 3% of Samsung's annual revenue and probably less than 1% of their profits (components are typically low margin). While Apple is a big customer, they aren't really a "golden goose" for Samsung.

Re:one word

[Anonymous Coward]

But this goose has a long history of just shitting on their suppliers, rather then producing golden eggs.

I say, slaughter the fucking thing and eat it. Other geese will arrive on the scene.

Re:one word

[sjames]

Apple better hope that Samsung is a more adult company than Apple is.

Re:one word

[osu-neko]

I'm sure Samsung would be happy to continue manufacturing for Apple, as it is still income.

Indeed. Apple charges premium prices for its products. Samsung wants a cut. Nothing wrong with that.

Re:one word

[slashmydots]

In the gaming world, we'd refer to it more as "self-pwned" actually since it was entirely their fault. You know, like blowing yourself up with your own grenade or rocket launcher or driving your vehicle off a cliff, lol. I'd give a "glass houses" reference but they're way past that. Them suing Samsung was more like riding down a river on a Samsung wooden raft and then lighting it on fire while they're still on it. Did the execs honestly go from "let's sue our competition out of existence because they're selling far more smartphones than us!" to "Ohhhh crap, they make half the stuff we use" without anyone pointing that out ahead of time?!

Re:one word

[maeglin]

There's a difference between doing business, and killing the golden goose out of childish motive.

I think Samsung probably has enough other sources of income to weather any ill effects. But, really, I am curious why you think it's a bad policy to consider more than profit motive when making business decisions? If I can't trust my partner not to sue me why should I trust that they are entering contracts on good faith? I see a lot of this sort of "business is sterile" thinking on the internet and I'm not sure that it's right. Maybe it is, but it seems wrong to me.

Two other similar concepts to yours:

1. "They have no choice! They have to grind up babies for extra profits otherwise their share holders will sue them." If that's really a concern you put "without grinding up babies" in your mission statement -- or, something about "ethics and social responsibility". The mission statement is on page 1 of the annual report so no one can claim it's not there. Granted, not all mission statements mention ethics but many do, and even more declare customer satisfaction as a goal, or something lofty like the betterment of the human condition.

2. "Corporations are comprised of many people and therefore can't have an 'MO'." Umm yeah, there are only two ways that I've seen someone leave a partnership with Microsoft unscathed: they never entered into a partnership Microsoft or they were the largest technology corporation on the planet -- wait, no, even IBM got screwed. Just because they've destroyed all previous partnering firms that doesn't mean that they'll do it again, right?

Re:one word

[TFAFalcon]

Well Apple is trying it's best to keep Samsung from competing against them in the mobile market. So why shouldn't Samsung try the same thing? If no more iPhones are sold, then more of the other kinds of phones likely will.
At the same time this might scare Apple into negotiating instead of suing over rectangular devices in the future.

Re:one word

[WindBourne]

Roughly 200 million units this year will be sold. You can guess that next year, it will be around 250-300 million. And around 300-350 for 2014 (last year of the contract).

So, it is around 15 Billion, give or take.

So far, Tim Cook is making QUITE the splash.

Re:one word

[CnlPepper]

erm.... yeah its not like Samsung produces billions of other chips. They must be terrified.

Re:one word

[chinton]

Apple probably has quite a few patents for overcharging for products, too...

Re:one word

[Anonymous Coward]

idiots that jerk off over Job's pics might move to a brand that doesn't use Samsung parts at all. Other people won't give a fuck and buy the samsung toys.

There, fixed that for you.

Re:one word

[Anonymous Coward]

Much like today's PennyArcade comic, a classic self-pwn dragged out, zoomed in, properly cropped and framed, and shared for maximum shame.

http://www.penny-arcade.com/comic/

Re:one word

[Anonymous Coward]

I doubt many iPhone customers know what's in their phones at all.

Re:one word

[Splab]

And the 1 billion verdict is probably going to be heavyly adjusted, once Samsung has worked it up the appeals chain.

Re:one word

[Anonymous Coward]

While we're bending the English language: holyshittheyreallypwndApplehard

Re:one word

[ArcadeMan]

And if you want to make sure people know which comic you're talking about in the future (i.e. not today or tomorrow), you might want to give the full link to the comic in question:

http://penny-arcade.com/comic/2012/11/12

Re:one word

[Nicko011]

It's more like $1.5 billion to $2 billion from my estimation. The processor in the iPhone 5 has a value of around $17.50.
Multiply that by around the 500 million in sales and you get $8.75 billion. A 20% increase puts that up to $10.5 billion.
Of course, this is all estimation.

Re:one word

[erroneus]

Indeed. Even though Samsung's continued ability to do business is important in both the short and long terms, they may have to assess what their long term ability to stay in business may be and adjust to better assure their future. If they feel that future is threatened by Apple's legal actions, they may just have to temporarily interrupt a source of income in order to slow down the assault against them.

One might look at it this way:

(finctional) US Arms manufacturers during WW2 were selling to Japan and Germany. Meanwhile, the US is sending soldiers out to fight enemies which are armed with US made weapons. So the dilemma is obvious in that case right? The enemy is a source of revenue. On the other hand, continuing to supply them with weapons may enable them to more easily kick our asses. What a difficult choice this is.

Obviously, in the fictitious scenario, the government would step in and charge someone with supplying arms to the enemy. But in the case of Apple v. Samsung, it's a bit more murky. After all, breaking an arms contract with the enemy is trivial in war. Breaking a contract "in business" is quite a different matter.

Re:one word

[Xest]

Yeah, I guess he's learning though. I mean, he's just learnt the basic principle of business that if a company has a sudden increase in costs of doing business, like say, a flawed $1.05bn patent verdict against them, then they have to up their prices to make up for it.

Don't worry Tim, soon you'll get to learn about other business things like redundancy terms, but at least being in the position you're in you'll probably also get to learn all about golden parachutes too which will be nice for you.

Re:one word

[Braino420]

u mad bro?

Re:one word

[Nivag064]

"Corporations are comprised of many people"

Hmm... the above is wrong (an all too common mistake), correct is either:
"Corporations are composed of many people"
or
"Corporations comprise many people"

Re:one word

[OhSoLaMeow]

... And the price increase gets pass down to ... oh shit!

Re:one word

[carnivore302]

how about: Hahaha!!

Re:one word

[amicusNYCL]

There's a difference between doing business, and killing the golden goose out of childish motive.

Are you referring to Samsung's supply contract with Apple, or Apple deciding to sue their supplier over the shape of their devices? Which one is more childish?

Re:one word

[michelcolman]

So it actually makes perfect sense to squeeze an extra 20% out of that last year they have. Apple's leaving anyway, but in the mean time they're stuck with you, so why not charge them some more. Instant money with no downsides!

Re:one word

[Gr8Apes]

You mean like Google's CEO Eric Schmidt being on the board of Apple, seeing what Apple was doing, and then essentially copying it at Google? No conflict of interest there or potential theft of ideas. Nope, none at all. The only thing I'm surprised about is that he hasn't been sued or worse. Maybe that's coming.

Re:one word

[93 Escort Wagon]

I believe Samsung has already told Apple they'd be terminating the contract next year or so ... so it's not like they're at risk of losing a contract they've already decided they don't want any more.

The idea that Samsung "told Apple they'd be terminating the contract" is silly.

The contract runs through 2014. All contracts have end dates, and, while a company can attempt to renegotiate (and usually the contract contains language regarding under what circumstances a contract can be renegotiated), they are legally binding for the time period defined in the contract. There's no "we don't like you anymore, so we're ending it early".

For that matter, there's no "we don't like you anymore, so we're going to start charging you more just because" in a contract. Samsung would have to justify the price increase according to terms defined in the contract. Also, given the language of the story, it's likely Apple had an opt-out clause that kicked in under those circumstances - but, being unable to find another supplier, they had to agree to the increase.

Heck, given the vague nature of this story - it's possible this was a NEW contract, and Samsung said "we need to charge you more money for this part if we're going to keep making them for you". But then you have the problem of Samsung signing a new contract with Apple, which goes against the prevailing narrative in this discussion.

Now Samsung could tell Apple they're unwilling to renew an existing contract after its termination date, but that would be a different situation entirely. And, if you claimed that, you'd really need to provide at least a tiny bit of evidence to back up your statement... well, anywhere but Slashdot anyway.

Re:one word

[symbolset]

Samsung makes competing products, so not selling to Apple might be in their interest.

Re:one word

[Richy_T]

I guess if their aggressive stance against Android causes Samsung to stop providing processors, they could always turn back to Motoro.... oh dear.

Re:one word

[Anonymous Coward]

Samsung should buy LG just to bone Apple.

Re:one word

[Invisible Snake]

I think it works a bit differently. Apple has started to decrease the amounts they buy from Apple. When the ordersize decreases, the costs per item increase. That is why discount on large amounts exist. Possibly Samsung personell wants more salary too once in a while. And with Apple starting to claim they want to stop using Samsung as a provider, Apple does not have an extra advantage in the offering process. It is not like Apple will buy more if the price goes down. It more that Apple still buy's because they cannot do without Samsung yet. Ofcourse that is an advantage for Samsung in the negotiations.

Re:one word

[thoughtlover]

In India, we call it KLPD. Apple lost all the way, and Samsung recovered what they lost elsewhere.

And those that continue to support Apple during their fanatical litigious phase will lose out with higher prices. Lawyers cost a lot. Apparently, payback is costly, too.

Re:one word

[Anonymous Coward]

I believe Samsung has already told Apple they'd be terminating the contract next year or so ...

Please post a link otherwise we'll have to conclude that you're full of shit.
Thank you.

Re:one word

[thoughtlover]

So far, Tim Cook is making QUITE the splash.

IIRC, Tim Cook was the guy that thought ahead to procure large inventories of flash memory. That kept the cost low and ensured they could meet consumer demand --something Apple has famously struggled with. This patent spat was initiated by Jobs, not Cook (remember Jobs saying he'd use the last cent of the company to sue any other company using 'their' ideas??). Cook has the option to make peace and get back to making computers, not enemies.

Re:one word

[Anonymous Coward]

Apple tried moving to Toshiba too, but they may not exist for much longer.

Re:one word

[manaway]

Hold up there big thinker! I read where Apple sued Samsung and won, and then Samsung raised prices to Apple. Now you're saying the two aren't necessarily related? That there is more to decision-making than just two actions which media jumped all over? This is not how I prefer my predigested news, but thanks for trying to educate me.

Re:one word

[thoughtlover]

After that, Samsung loses the contract once and for all.

I believe Samsung has already told Apple they'd be terminating the contract next year or so ... so it's not like they're at risk of losing a contract they've already decided they don't want any more.

Samsung knows that Apple will NOT be their customer forever. It's well-known that Apple's new A6 leaves other ARM-based chips in the dust. Now there's speculation that they are going to ditch Intel for their desktop chips (which they really don't do). I'm a bit surprised that Apple doesn't seem interested in AMD.

Re:one word

[maeglin]

"Corporations are comprised of many people"

Hmm... the above is wrong (an all too common mistake), correct is either:
"Corporations are composed of many people"
or
"Corporations comprise many people"

Thanks. I appreciate your grammar enforcement efforts. Keep up the good work.

Re:one word

[thoughtlover]

Just to reiterate my feelings as how different Jobs and Cook are..... I just read an older story that Cook was as relieved as HTC's CEO to end their patent dispute. I highly doubt Jobs would have taken the path that Cook did.

Re:one word

[gutnor]

Samsung is number 2 by a very large margin above number 3. If they can significantly hurt iPhone market share, they will be in a very strong position to basically define the smartphone market. For the same reason that nobody really cares if Samsung or Apple win whatever lawsuit, they won't really care why the iPhone 6 is so much more expensive. Samsung is overrepresented in the shop catalogs, so that is a good bet that they will get the most benefit from any failing on Apple side.

That is going to be interesting, as long as neither Samsung nor Apple manages a kill blow, that will be good for the customers (Apple will have to be quite innovating to offset the price hike. On the other hand, Samsung will have to drop the price to really hurt Apple). Even better if that little battle gives some oxygen to other players like MS and RIM and if Google manages to revive LG and HTC.

Anyway, this is a good example of why relying on your main competitor to build your product is not the best position to be in. (if anybody had any doubt why it was necessary for Apple to have their own Map application, or why Android makers shit their pants when Google bought Moto, or why OEM became pale when MS built Surface). Also that is no wonder that Apple was especially bitter against Samsung in their lawsuit, both companies are on a collision course.

Re:one word

[Anonymous Coward]

... And the price increase gets pass down to ...

Apple customers! See, nothing wrong at all.

Re:one word

[crizh]

Samsung is number 1 by a very large margin above number 2.

Surely.

Re:one word

[crizh]

How are Apple going to sell 500 million iPhones in the next year?

Surely 50 million is a far more likely number.

Re:one word

[Anonymous Coward]

>At the same time this might scare Apple into negotiating instead of suing over rectangular devices in the future.

Doubt it, they'll just cut all business ties with them and instead promote Samsung's
competitors. Or maybe even buy one of them out and compete directly on Samsung's
home turf - I hear Sharp are in a bit of trouble atm...

Re:one word

[asdf7890]

Why? If Samsung can make money from iPhone sales, why would they want to stop the sales completely?

The supply deal between Samsung and Apple is already due to end (in 2014) IIRC, so Samsung are in a position to lose at most that. Chip manufacture is an expensive business, there are a fair few players in the mobile device market right now and Samsung don't have infinite production capacity - presumably they think they can make the same money (or more) using that finite resource to service other clients (including other parts of themselves), and do so without helping a competitor, they may even already have new contracts lined up ready.

My assumption is that Samsung could do better now. The contract must have room for price variance nor room for Samsung to walk away, but clauses that would allow Apple to walk away. If I'm right then what Samsung have done is simply demand Apply pay the going rate, which is higher right now than when their deal was first negotiated. They couldn't lose: either Apple agree and give Samsung what they want, or Apple walk away and Samsung get the same from others (or via equivalent saving by being able to make use of the manufacturing resource directly themselves).

If Samsung caused the cessation of iPhone sales altogether, iPhone customers might move to a brand that doesn't use Samsung parts at all.

I think that inconveniencing a competitor in another market probably didn't even come into it, other than inspiring a few humorous/ironic/what-ever notes on internal memos. This seems to be to be basic cost/benefit and "what the market will bare" stuff. If anything inconveniencing Apple would have made them think twice rather than make them more eager to cause disruption: being seen to deliberately inconvenience a partner, no matter what the provocation, can look bad and make other potential partners think twice about dealing with you.

Re:one word

[sl4shd0rk]

So far, Tim Cook is making QUITE the splash.

Yes, like that of a commode.

Re:one word

[Anonymous Coward]

But, really, I am curious why you think it's a bad policy to consider more than profit motive when making business decisions?

It isn't bad policy, it is in fact the only correct policy. However it is poor strategy to sacrifice long term profits for short term gains.
 

Re:one word

[gutnor]

If I can't trust my partner not to sue me why should I trust that they are entering contracts on good faith?

Conversely, how can I trust that my partner who just created a product line in direct competition will always have my best interest in mind ?

But let's be realistic one second. Samsung can still refuse to sell to Apple if they wanted to, there is no need to hike the price. Samsung is probably in a position to ask more money and unless the CPU market is fucked (i.e. Samsung has a monopoly), the price it will ask is going to be the market price. Basically, meh, only a news because Samsung and Apple are the Lady Gaga and Paris Hilton for nerds.

Re:one word

[Anonymous Coward]

It wasn't about just the shape, but don't let that stop you from propagating your ignorant view if it makes you feel better about which phone/computer you purchased.

Re:one word

[Anonymous Coward]

There's a difference between doing business, and killing the golden goose out of childish motive.

As opposed to suing the hand that feeds you?

Re:one word

[rsborg]

All of Apple's contracts combined (display, processor, memory, etc) only account for about 3% of Samsung's annual revenue and probably less than 1% of their profits (components are typically low margin). While Apple is a big customer, they aren't really a "golden goose" for Samsung.

How much of the rest of the company's semiconductor profits are due to the economies of scale that Apple brings? Yes, they're the top dog now, but they don't own Android, and users can be fickle from one year to the next.

I don't think Samsung can that easily dispose of Apple's business.

Re:one word

[rtfa-troll]

Samsung/Google are now in the same position as Microsoft in the mid to late 90's. RIM / UNIX is marginalized into business customers. OS2 / Windows on the Mobile is clearly dying and no longer represents a competitor. They are now going to get to an almost total dominance of the mobile market.

At this point they need a credible competitor for anti-trust reasons. They haven't broken the law like Microsoft did, so their monopoly wouldn't be illegal, but on the other hand they don't have the home field advantage which allowed Microsoft to twist the justice system and escape punishment.

The people who are going to be the biggest losers from this are operators like AT&T. They have made a strategic mistake by not supporting Apple and/or a second Android vendor and pushing irrelevant products nobody wants. If they don't get back into the field soon and support one of Apple, Samsung or ASUS or, as a long shot RIM, they have little chance to influence their own future.

Re:one word

[Anonymous Coward]

You can sue a product now?

Re:one word

[HiThere]

Sharp, another Apple supplier, appears to be on life support (from Apple).

Apple was not wise to antagonize Samsung.

Re:one word

[Nicko011]

The comment that I was replying to used the 500 million number. The article itself said they're selling 200 million units this year, up from 150 million units.
If the contract expires at the beginning of 2014, then there will be one year of sales, or around 250 million units (assuming some growth).
It could also expires some time during 2014, which is up to 2 years of sales. In that case, 500 million is a good estimate.

Also, this includes iPad processors, which cost a bit more.
With all of those assumptions, it's likely that the difference in cost will be somewhere around $1 billion. It could be more or less depending on sales and when exactly the contract expires.

Re:one word

[Anonymous Coward]

Win, lol

Re:one word

[gutnor]

Depends if you look volume or profit, tablet included or not, .... It is worse if you think they are number 1 though - that means the mass market is already fucked. Apple is retreating in the high-end and Samsung will be the Microsoft of the smartphone generation, with vanilla (free) Android painfully maintaining a few percent market share from /. geeks.

Re:one word

[Anonymous Coward]

Where do you get this #2 thing? From everything I am reading and seeing it definitely seems like Samsung has taken the #1 spot recently.

Re:one word

[viperidaenz]

... not me! Go Samsung!

Re:one word

[Hatta]

Self-pwned while making cell phones?

Re:one word

[viperidaenz]

Google didn't invent Android, they bought it.

Re:one word

[viperidaenz]

Samsung can ask for more per chip because there are no other manufactures with the capacity Apple requires.
If someone else can supply 100M chips for $15M Apple can't accept it if they require 500M. They're forced to buy from Samsung for a premium.

Re:one word

[svirre]

Prices in fabs are normallly on a pr. wafer basis. Also normally prices go down, not up...

Re:one word

[Weezul]

Samsung will never be Microsoft because
(a) Apple would never become the old Apple, NeXT, etc. again,
(b) Google shall keep Motorola running just fine, and
(c) Samsung is not an American company.

I'll personally support Samsung simply because they are not an American company and Korea lacks the political muscle to impose their companies' will around the world.

Also, I'm exceedingly happy with Samsung for making the Galaxy Note, which does double duty as a phone and table. Apple created a new market that basically doubled consumers gadget expenses, but Samsung reduced that price tag.

Re:one word

[Anonymous Coward]

[citation needed]

Re:one word

[warrigal]

>> Apple probably has quite a few patents for overcharging for products, too...
You say that as if there was no alternative to Apple's products. In fact, virtually the whole industry shelters under Apple's price umbrella.
Imagine the outcry if Apple started competing on price. I suspect "predatory pricing" would replace "overcharging" in your posts.

Re:one word

[tbird81]

Douchebags, hipsters, and the parents of rich spoilt brats.

Re:one word

[Anonymous Coward]

With all due respect, what world do you live in? It's standard practice to have those clauses in contracts.

Re:one word

[Anonymous Coward]

Hey look, it's an Apple fanboi shill!!!
  Samsung's copying is no more egregious than Apple's. In fact, even less so, because they aren't suing people saying they invented it.

Re:one word

[mjwx]

So far, Tim Cook is making QUITE the splash.

IIRC, Tim Cook was the guy that thought ahead to procure large inventories of flash memory. That kept the cost low and ensured they could meet consumer demand --something Apple has famously struggled with. This patent spat was initiated by Jobs, not Cook (remember Jobs saying he'd use the last cent of the company to sue any other company using 'their' ideas??). Cook has the option to make peace and get back to making computers, not enemies.

Cook had every opportunity to end it.

They could have bought Samsung to the table. With the way the case was going (Read: how biased Judge Koh was) they would have jumped at the chance. Cook could have dismissed their claims agianst Samsung without predjudice...

But Cook didn't. He's cut from the same cloth as Jobs.

Re:one word

[mjwx]

You mean like Google's CEO Eric Schmidt being on the board of Apple, seeing what Apple was doing, and then essentially copying it at Google?

No,

Because that didn't happen. Android Inc. started in 2003, Google bought it in 2005.

The only thing I'm surprised about is that he hasn't been sued or worse.

This is because it never happened. Google was working on Android before Apple was working on the Iphone.

Re:one word

[Anonymous Coward]

HTC had apple by the short and curlies, this ground has already been covered.

Re:one word

[steelfood]

On the other hand, it seems Apple's SOL without Samsung's parts, whatever they might be.

It would be delicious irony if Samsung charged Apple more because of the increasing legal overhead Samsung needs to take into account when pricing their goods.

Re:one word

[steelfood]

I have to imagine that Apple had plans to switch suppliers. The plans may have been delayed or may have fallen through though.

I'm certain if they were switching suppliers, everybody wants a cut of the luxury tax Apple charges their customers. And since nobody can quite get manufacturing costs for this one part down like Samsung, perhaps Samsung's price increase ended up being the cheapest anyway. I heard Apple already is in the proces sof moving away from Samsung's LCD panels.

Suing Samsung wasn't a good long-term strategy, but it was more of a stop-gap measure to slow down Android's progress and rate of adoption. It worked, to some extent, in that they managed to postpone the release of some of Samsung's newest flagship products. But it also didn't quite work, because it legitimized Samsung's comparisons (Just like the iPhone, but without the silly restrictions!), and put Samsung's name in the spotlight.

Re:one word

[mjwx]

I think Samsung probably has enough other sources of income to weather any ill effects.

More accurately, Samsung has enough other customers that they can afford to lose Apple. The phone market is huge and Apple is a small part of that now. Samsung could probably sell their products to other manufacturers for more profit.

Re:one word

[steelfood]

They don't have to drop their price significantly. Just price the iPhone parts in a way that forces Apple to increase the price of the iPhone (or decrease their profit margin).

Then, it's a matter pointing out that their product does exactly what Apple's product does. Oh wait, Apple already did that part for them.

Re:one word

[thetoadwarrior]

I knind of stupid considering they can take their CPU design to anyone else which I'm sure they've already been in the process of doing.

Re:one word

[oxdas]

$220 billion in revenue last year. $7 billion of it from Apple (and low margin at that). The semiconductor business makes very little profit Samsung. Last quarter, 69% of Samsung Electronics profits came from their own branded phones and 14% came from their mobile display business (Apple orders had fallen from more than 10 million last year to only 1.5 million last quarter). Even with processors, your economies of scale do not increase linearly. Samsung sold more than 60 million branded mobile smart devices last quarter alone. That gives them tremendous economies of scale already. Apple is just gravy.

Re:one word

[farble1670]

It's well-known that Apple's new A6 leaves other ARM-based chips in the dust.

sorry. the exynos 5 (samsung's A15) wipes the floor with the apple A6.
http://www.androidauthority.com/exynos-5-dual-benchmarks-125134/

Re:one word

[Anonymous Coward]

I can't tell if you were referring to placement in the smartphone area, but Samsung is actually number 1 with regards to smartphone market share. In fact, they're #1 and ahead of apple by a fairly large margin:
http://news.cnet.com/8301-1035_3-57524607-94/latest-smartphone-stats-apple-gaining-ground-on-samsung/
http://arstechnica.com/apple/2012/08/apple-owns-us-smartphone-market-while-samsung-dominates-worldwide/
http://news.cnet.com/8301-1035_3-57540923-94/samsung-outdoes-apple-2-to-1-in-smartphones-nokia-falters/

Apple probably can't manage a killing blow anytime in the foreseeable future, since they're relying on Samsung to make phones at all, and Samsung basically doubles them in market share. It's too late to worry about maps and things like that, the days when Apple was ahead and just needed to keep the status quo are gone, right now they need to release something exciting and new that will place them ahead of Samsung, otherwise why would people bother switching?

Samsung could potentially kill Apple in the smartphone market, because Apple's market share is based partly on the device's perception by the public. If Iphones become uncool or "old" they'll basically become irrelevant. I'd think maintaining market share based on people's perception of the "coolness" of a device would be harder than doing so based on a rapidly advancing OS and value for money.

Re:one word

[farble1670]

I knind of stupid considering they can take their CPU design to anyone else which I'm sure they've already been in the process of doing.

very few, if any, other manufacturers can produce the chip in capacity and at the cost. in fact, given that apple didn't walk away at a 20% increase, it's likely samsung is significantly beating apple's next best option.

Re:one word

[Anonymous Coward]

Not entirely correct. A contract can provide for the right of a party to terminate with x (period of time) notice. So it's entirely possible that Samsung's contract with Apple provides that Samsung can terminate the contract with a year's notice; and that Samsung has already issued this notice to Apple. (I don't know if they have; I'm just saying it's possible).

And it's perfectly possible to have a "we don't like you anymore, so we're going to start charging you more just because" clause in a contract. Ever read the fine print in your credit card agreement, or mortgage agreement?

Re:one word

[farble1670]

If they can significantly hurt iPhone market share, they will be in a very strong position to basically define the smartphone market.

except they won't do that, not this way. samsung is a gigantic corporation with lots of divisions that makes money in all sorts of ways. they position themselves to make money no matter what happens. there's simply no way they would cripple their own fab division to boost their consumer cell phone sales division.

apple is samsung's second largest customer (sony is #1). samsung will happily sell them components until the end of time. they'll happily compete with them in the consumer electronics space as well.

Re:one word

[BronsCon]

Sitting here with my HTC phone, Toshiba laptop, iPad, and iPod Classic, glancing over at the PowerMac G3 I converted into an office chair (with convenient storage) and the PowerBook G4 that currently hosts my mail and DNS services, I have to say I think Samsung is in the right, here.

Re:one word

[LongearedBat]

Revenge!

Re:one word

[CAIMLAS]

If Samsung caused the cessation of iPhone sales altogether, iPhone customers might move to a brand that doesn't use Samsung parts at all.

Such as? That leaves maybe a handful of phones on the market. LG, maybe? It would be consistent with Apple quality, but in all seriousness, that's not likely to happen.

Re:one word

[Anonymous Coward]

idiots that jerk off over Job's pics might move to a brand that doesn't use Samsung parts at all. Other people won't give a fuck and buy the samsung toys.

There, fixed that for you.

Are you 12 years old?

Re:one word

[Anonymous Coward]

Sure, Android was in development before iPhone... but dude, did you SEE what it looked like before that?

http://gizmodo.com/5941817/what-really-made-steve-jobs-so-angry-about-google

I was about to point this out as well. I saw early Android prototypes, before the iPhone came out. They seemed more like Blackberry killers. Then the iPhone hit the market, nothing was heard from Android until the Google takeover which was followed by cryptic rumors of a Google phone and then we got something that seemed... well... heavily influenced by the iPhone OS. Of course that doesn't fit too well into the Apple haters mythology of the Jedi Knights Google and Samsung and their evil nemesis Sith Lord Apple INC, but those pictures on gizmodo pretty much tell the speak for themselves. I expect Jobs might have reacted less violently towards Android if this transformation hadn't happened while Eric Smith sat on Apple's board.

Re:one word

[Dunbal]

IANAL but not selling to Apple might expose them to anti-trust allegations. Now how can you go after them on anit-trust grounds when they are more than willing to sell to their competitor, adding a sligh premium to cover, er, legal fees and awards and such...

Re:one word

[Anonymous Coward]

The shattered hopes and dreams of overworked chinese factory workers?

Re:one word

[Dunbal]

You mean those patented goods? I'm sure another supplier will show up and be legally allowed to sell his product in oh, 20 years or so. But first let's talk about copyright issues on the layout, design and firmware on said chips...

Re:one word

[Dunbal]

But first, make foie gras. I hear the goose likes it.

Re:one word

[wed128]

Or care...and why should they?

Re:one word

[AmiMoJo]

Usually the contract will state that Samsung may review pricing whenever they like, during to changing circumstances. Apple may continue the contract at the new price, or walk away from it. It appears that Samsung looked around, noticed no-one else was in a position to manufacture these parts for Apple, and decided to turn the screw a bit.

Samsung is probably assuming that Apple won't renew the contract anyway, so there is no point trying to generate any good will or future business. Screwing them as much as possible in the here and now is the best option.

Re:one word

[rioki]

How about the contract ended and Samsung said they won't continue the contract under the previous terms. Then Apple asked under what terms would you? Then Samsung said +20%. And Apple said let me run that past our purchasing department... Samsung can't just raise the price by 20% on an ongoing contract. This was probably a renewal of an existing contract.

The idea that Samsung "told Apple they'd be terminating the contract" is silly.

That idea is not silly, when you add "under the current terms". The people at Samsung are not stupid, to refuse a large amount of money from Apple.

Re:one word

[poetmatt]

Google copied apple?

hahahahahaha *takes breath* hahahhahahaha.

You might want to look at what happens. Because it's not a one-sided affair. The only thing I'm surprised about is people still actually think apple invents or comes up with *anything*, because they don't, never have, and guess what? They don't have to. There's absolutely no reason they need to be the originator. They just need to stop suing the people whose stuff they can copy and incorporate into their own products.

Re:one word

[Gr8Apes]

See this comment just above. If you don't believe people copied Apple, well, there's a special place in bellevue for you.

Yes, Apple takes ideas from others - Xerox was the first example, and Jobs himself made no excuses about it. However, note that Apple's implementation of the idea was far in excess of what was accomplished at Xerox, hence why we had Apple computers in the 80s, and no Xerox computers to speak of. Regarding the phones, there were lots of phones out there. All bad, IMNSHO. Blackberries were the worst, again, my own perception. Until the iPhone came out, browsing on the web was painful, at best. But the best thing about the iPhone was that it broke the phone companies methodology about phones, and freed hardware makers from restrictive and anti-innovative contracts with the phone companies. Say what you will, but the iPhone broke open the phone hardware market for everyone. The same thing happened with the iPod, and the tablet was also, technically, a copy of ideas before it.

So why, if Apple merely copies, do they sell so well, and so thoroughly bash the competition? It's not because they low-ball their prices - you'll probably be the first in line to claim they're higher than similar competitive devices despite evidence to the contrary. (Yes, you can buy cheaper items from others, but not the same hardware, as soon as it's matched up, the prices are close or in Apple's favor - how's that work?) It could the the reality distortion field around Jobs - but he's been dead a year and that's some distortion field if it's still sticking around. Maybe, it's because the value for what you pay for is really there? The quality of the product is actually better than the competition? Perhaps it's the far better service? The lengthy support? The fact that a 3 year old laptop can still look almost new despite heavy usage and has at least another 2-3 years of life left in it? Gag - that starts to sound like an ad, but still, these are all true statements compared to their competitors.

Re:one word

[Anonymous Coward]

This keeps coming up. The numbers vary. Apple's 3% of Samsung's annual revenue. As if it's a dismissal of importance. Go lose a customer representing 3% of sales and see how well that goes over. It's HUGE. Does it KILL a company? No, but they are a HUGE source of revenue. And Apple shifting flash purchases, screen purchases, and soon, no doubt CPU manufacturing away from them, will absolutely be a loss.

Re:one word

[Anonymous Coward]

Samsung is number 2 to who? Nokia?

Nobody else makes as many phones (or even smartphones) in total across all (smart)phones...

Also, APL doesn't have to be innovative to offset the price hike if they don't mind cutting into sheer profits. Looking at their balance sheet, the revenue from media and applications are dwarfed by hardware sales. An extra 10-15 bucks per unit can easily be swallowed considering their huge margin they're already making now.

Re:one word

[poetmatt]

It doesn't fucking matter.

Copying is what our society does. Anyone who has a problem with it simply doesn't respect that that's how our society exists.

So why, if Apple merely copies, do they sell so well, and so thoroughly bash the competition?

They bash the competition because they don't know how to compete and are petty as fuck. See: situation in the UK which they were shamed for as well as creating collusion via lawsuits with Oracle, MS, Apple and SEO against Google That's how they "differentiate". It's not even competition. That and spending the highest amount of their money on marketing. Not R&D (which has dropped), not even lawsuits (which has risen), but marketing. You don't hear about google spending billions on marketing, and you never will - they don't have to. Legitimately good and competitive products market themselves.

Has it backfired? Yes. Is that continuing? Might be an understatement.

Re:one word

[hazydave]

Supposedly, Apple tried to buy TSMC's entire output of 28nm chips... and was denied. Which makes perfect sense -- they have a better position supporting all sorts of companies, particularly given how big the fabless companies (Broadcom, Qualcomm, AMD, nVidia, etc) are getting. It's certain Apple wants to find alternate fabs, now that they're no longer dependent on Samsung to design the A-series SOCs for them. But they may be too large to jump entirely to a single alternate, even in 2014.

Samsung, on the other hand, is already the world's largest semiconductor company in volume if not market cap (that's Intel, of course, with Samsung at #2), and given the rise of the ARM, they'll have plenty of other folks to build chips for in the future. Assuming they don't scare them all away -- the PC industry might have evolved differently if Intel had jumped into retail PCs in the early days.

Re:one word

[hazydave]

Samsung can't just raise the price by 20% on an ongoing contract. This was probably a renewal of an existing contract.

Sure... and Apple can't all of a sudden start charging $500+ per copy of MacOS to kill off Mac Cloning. Yet they did.

It's all based on what's in the contract. There's undoubtedly something in there about increased expenses. A billion in legal expenses sure qualifies, unless specifically excluded in the contract.

Re:one word

[hazydave]

In particular, Apple doesn't seem to have done much with floating point. ARM sure did... check out the expanded Geekbench results:
http://arstechnica.com/gadgets/2012/11/nexus-10-tablet-is-a-solid-house-built-on-shifting-sands/3/

Apple's still ahead on GPU performance. As a big games company, no surprise on that one -- that's what people do with iOS.

Re:one word

[hazydave]

At lower volume, ARM SOCs run $10-$15 typical, and you can bet Apple wasn't paying that, 'cept maybe for the big fat A5x. CPUs were far more of a high profit item for Intel, since they controlled them, but ARM has made the CPU market nearly competitive as memory -- another big market for Samsung.

I think Samsung's losing Apple's business any way they slice it... Apple doesn't need to have their chip foundry run by their strongest competitor, particularly given the high quality of commercial chip fabs that don't do any of their own chip production (Global Foundries, TSMC, etc).

Re:one word

[hazydave]

In fact... Samsung has used a large number of competitors' chips in their own devices. That's almost certainly due to clearing foundry space for Apple. Once Apple's out of the way, you may never see a Qualcomm or TI chip in an Samsung product again... unless they have a better offer. Samsung may also get the competitor's chips cheaper than others, not just due to volume, but perhaps foundry exchange deals -- Qualcomm is fabless, TI not entirely but they lack on the digital side of things. Both usually use TSMC, but not exclusively.

Re:one word

[hazydave]

Apple apparently offered TSMC a $1 billion bonus for their entire 28nm capacity... they were turned down. So it may well be they're having or had some issues finding capacity -- they may even be bankrolling some of it. Apple's not looking for average capacity, either, but something fairly cutting edge. Not that their designs are unusually challenging, they're pretty standard. But smaller dice equals higher profits and lower power -- it's important in CPUs in general, critical for Apple's mobile existence.

Re:one word

[thetoadwarrior]

Samsung is certainly a safe option because as you say they know what they can get out of them. The last thing they need to do is rush a switch. I suspect they are investigating their other options if they haven't already like anyone else would.

Re:one word

[Plumpaquatsch]

All of Apple's contracts combined (display, processor, memory, etc) only account for about 3% of Samsung's annual revenue and probably less than 1% of their profits (components are typically low margin). While Apple is a big customer, they aren't really a "golden goose" for Samsung.

Errm, when you say "Samsung", what exactly are you talking about? Samsung Group (which also sells insurances and container ships)? Samsung Electronics (which also sells household appliances and consumer products)? Or Samsung Semiconductor, which is the only part of Samsung Apple is a customer of?

Re:one word

[Gr8Apes]

You don't have a clue, and by "bashing the competition" I mean owning them completely. Why does Apple "own" those markets?

As for marketing, I suppose Samsung's budget is minuscule (as I walk by billboard after billboard of SIII touch me here - I wish to share a book/song/movie/podcast/etc a day with you, followed by more billboards of tablets, etc. Apple ads? Not that many)

And here's a last jab to just make you wax overly poetic: Why did Samsung not come out with a decent phone prior to the iPhone, especially in light of them making significant portions of the iPhone and having a large catalogues of phones, and were certainly more "experience" in the phone business than Apple? Perhaps it was a lack of vision? A lack of ability to meld parts together? A lack of focus? A lack of innovation? Take your pick, but there was at least one "lack" in there, if not more. And then for bonus points answer this honest question - why did Samsung come out with a phone that looks a lot like a clone of the iPhone just a few years after the iPhone was released?

Re:one word

[Anonymous Coward]

pwnd

Bazinga!

Re:one word

[poetmatt]

"Why did Samsung not come out with a decent phone prior to the iPhone"?

because they did? So did lots of manufacturers. Original motorola razr, LG chocolate, samsung had an equivalent as well.

Samsung has been making phones for years before apple. Nice um, slacker attempt though.

Re:one word

[Lord Balto]

Kismat Love Paisa Dilli? ;-)

Re:one word

[Lord Balto]

Of course they are not related. Don't you know that all cause and effect is mediated by a magical being living on the moon? ;-)

Re:one word

[Lord Balto]

Time to dig up Steve and put him back in charge. The morons are destroying the company again.

Inevitable

[Anonymous Coward]

All the companies are waging war on one another. Either Apple will start developing the chips themselves or someone else will.

Re:Inevitable

[houstonbofh]

Yeah... Suing a key supplier with no other substitute products is not a good business move. And this response made me laugh. :)

Re:Inevitable

[Krojack]

Either Apple will start developing the chips themselves or someone else will.

Well that worked out well for Apple Maps didn't it? =)

Re:Inevitable

[beelsebob]

Uhhh, apple already develops the chips themselves. Samsung just fabs them.

Re:Inevitable

[MightyYar]

Suing a key supplier with no other substitute products is not a good business move.

It's a good point, but gouging your customers is probably also not a good business move. Apple is not exactly cash-poor, and I expect Samsung to face a very capable competitor in the near future (TSMC?). So sure, in the short term Samsung will make a quick buck and sting their chief smartphone competitor. In the long term, they may see their manufacturing advantage disappear - along with an enormous customer.

Re:Inevitable

[bluefoxlucid]

It looks like Samsung passed their costs for the $1Billion judgment along to the consumer, and that consumer is Apple.

Re:Inevitable

[dimeglio]

The problems with Apple Maps have been somewhat exaggerated.

Re:Inevitable

[Anonymous Coward]

Are you sure that Apple would not have moved away from Samsung to some competitor anyway?

Re:Inevitable

[bluefoxlucid]

The Galaxy S3 is a bigger seller than the iPhone. Your rational analysis falls on the deaf ears of all the fucks Samsung does not give; if they can wound Apple while they're weak, they might be able to keep their product in consumer hands by being inexpensive (the Galaxy Nexus was $350 and the LG Nexus 4 is $350, Samsung could sell their S3 or upcoming S4 etc. for $300-$400 while Apple hangs onto a $600+ price tag and exclusive network service...) as well as top-notch, and then it's just a matter of keeping the wide lead ever-widening. Make Apple the underdog and then try to not be the crap product being overtaken by the top-notch underdog.

Re:Inevitable

[Anonymous Coward]

Both companies have been acting like spoiled children. I have a hard time feeling sorry for either, no matter the consequences.

Re:Inevitable

[Serious Callers Only]

Just curious, where do you live? If it's the US, the problems were very minor there in comparison to other parts of the world.

Re:Inevitable

[Missing.Matter]

I think Samsung is just reading the tea leaves. With the iPhone 4, Apple used to source components such as SDRAM, NAND flash, and CPU from Samsung. With the iPhone 5, they've dropped Samsung as suppliers of commodity chips, and now they're only sourcing the A6 processor from Samsung.

One might reasonably project that with the iPhone 6 or 5s or whatever it will be, Apple will drop Samsung altogether. Samsung might as well milk Apple while they can.

Re:Inevitable

[falcon5768]

"The Galaxy S3 is a bigger seller than the iPhone." Thats all well and good, but if you dont make any money off it (and Samsung doesnt) it doesnt mean shit to investors, Apple is still king and Samsung is still cheap plastic junk in their eyes.

Re:Inevitable

[Applekid]

I thought I lived in the US until I opened Apple Maps.

Re:Inevitable

[MightyYar]

The Galaxy S3 (their biggest seller) is selling slightly faster than Apple's biggest seller (the iPhone 4s), in terms of units. I don't know what the respective profit margins are. However, both companies have many other products, not the least of which are the tablets. Losing Apple as a customer would hurt, not just because Apple is their largest - it would also indicate that their competition has gotten good enough and large enough to play with the big boys. Any of their customers would then have the luxury of shopping around, not just Apple.

I suspect that Samsung knows what they are doing, but the stakes are quite high if they misjudge.

Re:Inevitable

[Andy Dodd]

Huh? Samsung doesn't make money off of the GS3? Then why are the most profitable Android device manufacturer?

Re:Inevitable

[strength_of_10_men]

It's a good point, but gouging your customers is probably also not a good business move.

This made me smile for so many reasons.

Re:Inevitable

[anyaristow]

The chip is an Apple design. Samsung is just the foundry.

Re:Inevitable

[MightyYar]

Correct, Apple seems to be throwing money at Samsung's competitors anyway - clearly this is part of Samsung's calculus. I just wonder whether this will accelerate the rate of their competitor's growth.

Re:Inevitable

[Anonymous Coward]

A 20% increase in price does not, in any way, constitute price gouging. If it did, nearly every company in the world would be guilty of it.

When your "enormous" customer (which is much smaller than your company) is in the process of shedding every supply contract they have with you, the smart thing is to make money while you can.

Re:Inevitable

[MightyYar]

I think you are right :)

Re:Inevitable

[AvitarX]

Agreed, my friends all love the new maps.

Re:Inevitable

[dintech]

Either Apple will start developing the chips themselves or someone else will.

Apple don't build much themselves. They're mostly a Samsung/Foxconn re-branding outfit.

Re:Inevitable

[the computer guy nex]

Either Apple will start developing the chips themselves or someone else will.

Well that worked out well for Apple Maps didn't it? =)

Actually Apple just joined Intel as the only companies on earth that hand-design their own processors. AMD doesn't even do it anymore. So yes, Apple does design their own chips - Samsung just follows the blueprints in their factories.

Also Apple only designed the interface for the new Maps, which is pretty fantastic. The data behind Apple Maps is supplied by TomTom. Apple did not create their own mapping data set.

Re:Inevitable

[jmauro]

You can be the most profitable and still lose money, if all your competitors are losing more than you are.

Unfortunately, while Samsung breaks down profits by division (their mobile phone division is modestly profitable, but no where near the margins Apple has), they do not break down their profit by individual phones. It's implied that the S3 is driving the profits of the division because of the number of units shipped, but at this point it's all analyst conjecture. For all we know they're losing money on the S3 and making it up on other phones.

Re:Inevitable

[MightyYar]

I sit in the cube across from one of the purchasing guys. He gets on that phone 9 hours a day to negotiate the most trivial amounts of money on parts. And this at a company where we only sell somewhere in the neighborhood of 10,000 machines per year. He can pay for his cost to the company for the year by saving perhaps $150 per machine. If he worked at Apple, he'd only need to save something less than a penny to justify his position. Hiking a single part from approximately $28 to over $33 is going to give their purchasing guys a conniption fit.

Re:Inevitable

[Anonymous Coward]

Are we sure this is gouging?
Apple has a reputation for demanding lower and lower prices, maybe this is Samsung correcting the price
to a reasonable level.

Re:Inevitable

[the computer guy nex]

The SGS3 is not a bigger seller than the iPhone. It has sold 30 million, while the iPhone 4S has surpassed this many times over.

Last quarter, when Apple released the iPhone 5, the SGS3 did outsell the iPhone 4S. If you add the iPhone 5 sales to the iPhone 4S sales and the SGS2+SGS3 sales, Apple comes out ahead.

Re:Inevitable

[bluefoxlucid]

It's fair to make a statistical assumption (i.e. high likelihood) that the popularity of the iPad is tied to the iPhone. That is to say: who the hell buys a Nexus 4 and says, "I want an iPad so I can get all these fancy Android apps on a bigger screen!" iPhone, iOS, iApps, iPad; Android phone, Android, Android apps, Android tablet. Eroding the iPhone market could erode the iPad market, which is better than double-dipping: even if Samsung doesn't make an Android tablet, once Android tablets gain popularity they're suddenly cool and people will match the phone to the tablet (which further weakens the market for the iPhone) in a feedback loop started by getting people off the phone so they'd match the tablet to the phone.

High stakes sure,but it's a good attack plan. As I said, Apple is weak--the Galaxy S3 is single-handedly outselling the iPhone--and so this is the time for Samsung to strike. There is also word on the wind that Apple may be trying to get away from Samsung in a vertical integration scheme (Apple is the next Carnegie Steel) fabbing their own chips, so perhaps Samsung has very little to lose.

Re:Inevitable

[mk1004]

Last I heard, TSMC only manufactures ICs for companies; they don't do design work. Apple could potentially hire someone to design replacement microprocessors and build them at TSMC, but it could be an uphill battle with all of the patent landmines they could run into. Displays, RAM and flash ICs are commodity devices, low margin, and there are only a few players that Apple can deal with. Dropping Samsung as a supplier limits Apple that much further.

So the history here as I understand it: 1) Apple designs a smartphone and buys components from Samsung, a manufacturer of ICs and end user products. 2) Samsung start making some similar phones and gets the shit sued out of them by Apple. 3) Apple says they're going to drop Samsung from future BOMs. 4) Samsung increase the price Apple must pay for their components. 5) Next salvo fired by Apple will be???

Re:Inevitable

[oxdas]

Samsung Electronics made profits of about $6 billion last quarter on revenues equal to 19% of South Korea's entire GDP. While not quite Apple's $8 billion over the same period, I don't expect to see Samsung execs begging for change anytime soon.

Re:Inevitable

[Ecuador]

Are you sure your friends are not just happy that you can't find them anymore?

Re:Inevitable

[Andy Prough]

Exactly!

Re:Inevitable

[Anonymous Coward]

Apple don't build much themselves. They're mostly a Samsung/Foxconn re-branding outfit.

You are saying that Samsung and Foxconn are the real brains behind the products - Apple's contribution is to sell the products that these two companies designed and built?

Who would have thought it. Thanks for setting us straight on that. I'm somewhat surprised that these companies only sell the products to Apple - or are you suggesting that iPhones/iPods/iPads are available from other sellers with different branding.

Re:Inevitable

[HaZardman27]

It's a good point, but gouging your customers is probably also not a good business move

You mean like what Apple does to its customers?

Re:Inevitable

[Anonymous Coward]

I was thinking the consumer here was the lawyers.

Re:Inevitable

[oxdas]

According to Samsung Electronics, two-thirds of their $6 billion in profits last quarter came from their smartphones.

This is about the same percentage for Apple, the iPhone, and their $8 billion in profits last quarter.

http://www.bloomberg.com/news/2012-10-25/samsung-profit-beats-estimates-on-surging-sales-of-phones.html

Re:Inevitable

[sjames]

I theorize that the famous reality distortion field didn't actually emanate from Steve Jobs, he just controlled it. Now that it is no longer under his control it acts randomly within Apple. Apple maps is simply reflecting that distortion's movements.

Re:Inevitable

[Anonymous Coward]

Just curious, where do you live? If it's the US, the problems were very minor there in comparison to other parts of the world.

There's other parts of the world? Pffft. Pull the other one! Next you'll try to get me to believe all those little places in the US that aren't Cupertino have PEOPLE living in them! Imagine!

Re:Inevitable

[dintech]

I was being flippant, but yes, that's what I'm saying. They're building products where the 'special feature' such as it's retina display, 4G LTE chip, A6 processor and so on are manufactured and of designed by NOT Apple. Other companies come up with new tech and Apple figure out how to get someone else to manufacture them into a complete product for them. They're not the Willy Wonka geniuses you think they are.

Re:Inevitable

[NatasRevol]

Show me *where* Samsung Electronics made those profits.

Was it in their high end phones that have lower sales*, but (possibly) higher margins?
Was it in their low end phones that have higher sales*, and (possibly) lower margins?

No one outside of Samsung has any idea.

*relative to other Samsung phone sales.

Re:Inevitable

[KingMotley]

Initially Samsung did some design work in cooperation with Apple on the processor design, but Apple has since moved it's design team totally in house. They don't need to initially hire someone, they already have the entire team in house as is.

Re:Inevitable

[adisakp]

Either Apple will start developing the chips themselves or someone else will.

Apple already develops their own chips. However, they do not manufacture them.

Re:Inevitable

[gman003]

Did you jump to that conclusion using directions from Apple Maps?

Re:Inevitable

[Smask]

Last I heard, TSMC only manufactures ICs for companies; they don't do design work. Apple could potentially hire someone to design replacement microprocessors and build them at TSMC, but it could be an uphill battle with all of the patent landmines they could run into.

If you had checked the list of Apple M&A, you'd found that Apple already owns P.A. Semi and plans to make their own chips at TSMC or GF (less likely).

Re:Inevitable

[horza]

Er no. The whole definition of profitable is not losing money. If everybody is losing money then nobody is profitable.

As for the "analyst conjecture" that record sales in their record selling phone leading to record profits may have something to do with their record selling phone... how much are these analysts paid? But yes, I am sure you know better and that their record profits have nothing to do with their best selling phone.

Phillip.

Re:Inevitable

[eth1]

Yep... I just ditched an iPhone for an SIII this round. The hardest part was leaving behind the apps, etc. that I can't use any more, or have to re-purchase an Android version.

Thing is, now that I'm on Android, I have a lot more choice for the next upgrade, and even if I don't get another Samsung, the chance that I'll go back to an iPhone is next to nothing. I think a lot of people keep getting iPhones because that's really the only upgrade path where you don't lose everything. Having switched, Android is much better than iOS, IMO, and once you break out of the lock-in, there's little reason to go back.

So every person that Samsung knocks away from Apple, is likely a permanent loss for Apple.

Re:Inevitable

[oxdas]

What does it matter "where" they made that money? They booked about $4 billion in profit to their phone sales last quarter. Apple booked about $5.3 billion in profits to their phones last quarter. Both companies are making money hand over fist on phones. Apple's margins are certainly higher as they made more profits on less than half the smartphones shipped compared to Samsung last quarter (57 million to 27 million smartphones). That said, insinuating that Samsung isn't making a tremendous profit on its phones doesn't reflect reality.

Re:Inevitable

[MozeeToby]

And this at a company where we only sell somewhere in the neighborhood of 10,000 machines per year. He can pay for his cost to the company for the year by saving perhaps $150 per machine.

How much do they pay him!? Seems like if he can trim even $15 per machine the company has come out ahead, for $150 they should give him a raise, a bonus, and 3 interns to help find the next batch of savings.

Re:Inevitable

[AvitarX]

I have android maps, so if anything they're happy I can't find then.

I actually think it's that in our area at least the turn by turn directions are better than any of the other apps they were using, and they are happy to have the turn by turn (but your theory on my odiousness could prove to be correct).

Re:Inevitable

[h4rr4r]

The comparison is Samsung's most popular single smartphone vs Apples most popular single smartphone. For last quarter that means the SGS3 outsold the 4S. Both of those are their respective companies most popular products.

Re:Inevitable

[NatasRevol]

Why can't people follow a thread.

I was asking how anyone can determine if Samsung is making any money off of the GS3.

Sure, they're making lots of money, but is the GS3 a loss leader? Are the feature phones actually making the bulk of the money and it might make sense for Samsung to drop the high end phones for more profits?

No one knows.

Re:Inevitable

[Anonymous Coward]

Isnt this just cherry picking results? Didnt the S3 get released this summer and thus would be much closer to the Iphone 5? Wouldnt it better to compare the first month of both, then the second etc?

Re:Inevitable

[Anonymous Coward]

So if Samsung supplies Apple with another 285 million chips, then the ~$3.50 increase will have covered the $1 Billion dollar judgment, excluding attorney's fees and/or additional expenses.

(1.0 x 10^9) / (3.5 x 10^1) = 2.85 x 10^8

Such a deal.

Any chance Apple might pass the cost along to the consumer, or would it be easier just to withhold some of the proposed shareholder's dividend?

They could call it the Steve Jobs Dying Wish Tax, to unsuccessfully sue Samsung into ground zero.

"When Elephants fight, the grass gets trampled."
                -- Traditional African Wisdom --
(from a tribal futurist anticipating the WTO, circa 15000 B.C.E., near a campfire at Ulduvai Gorge.)

Re:Inevitable

[ArcadeMan]

It's implied that the S3 is driving the profits of the division because of the number of units shipped.

So what you're saying is that they're losing money on every S3 sold, but they're making it up on volume?

Re:Inevitable

[Anonymous Coward]

The lack of public transit directions completely kills the app for me. It's very nearly worthless, and there's no good competitive app that I've found for my area, and the online Google Maps via Safari doesn't work nearly as well as the app did. It's enough to make me consider switching phones (after first confirming that some other phone does better).

I thought they had it and posted on slashdot that they did after I made an iOS6 update, but actually they have that symbol for public transit taunting me without actually doing a public transit search.

Re:Inevitable

[Anonymous Coward]

"The Galaxy S3 is a bigger seller than the iPhone."
True for one quarter. Right before the iPhone 5 was to be announced, and it was an open secret the new version was coming out. Of course that depressed Apple sales. We'll see if the S3 keeps that lead come the next quarterly report.

Re:Inevitable

[Anonymous Coward]

Not to mention, Samsung makes a lot of devices. TVs, components, etc. Mobile's one relatively small part of the whole.

Re:Inevitable

[Splab]

Well since they basically told apple to fuck of, I'd say it's probably not from the A6 processor...

Re:Inevitable

[NatasRevol]

A $3.50 increase is telling them to fuck off?

Re:Inevitable

[Anonymous Coward]

The whole definition of profitable is not losing money. If everybody is losing money then nobody is profitable.

You obviously don't understand signed arithmetic. A company that loses a dollar is not the same as one that loses a million.

Re:Inevitable

[Anonymous Coward]

How does that matter?

Re:Inevitable

[Anonymous Coward]

The problems with Apple Maps have been somewhat exaggerated.

Maybe if you live in New York City or some other major US urban environment. If not in the continental and urban US your results may vary.

Where I live (coastal Australia) the lack of detail is astonishing, the glitches are beyond astonishing and the misplacement of whole towns, suburbs and coastal features is an example of map-making incompetence at its best. Put simply, before IOS 6, I had useful Maps and Location Services functionality, now it is pretty much useless ... and turn by turn doesn't mean much if your results are invariably incorrect.

Apple Maps is diabolically bad. It is a cartographic disgrace. It provides directions to nowhere. If I didn't already know how to get to where I wanted to, nine times out of ten I would find myself driving into the sea, driving off a cliff, or in the wilderness far from where I actually wanted to be. If I travel overseas, and I do occasionally, I would be better off buying a Samsung Galaxy S3 for its (Google) mapping capabilities rather than relying on Apple Maps to keep me on the straight and narrow. These days if you can't rely on, you can't trust, the mapping capabilities of your phone then between 25 and 30% of its functionality goes out the door.

That's what Apple's Maps has done for me

Re:Inevitable

[Gr8Apes]

As I said, Apple is weak--the Galaxy S3 is single-handedly outselling the iPhone

I tell you thrice, it must be true.

Just keep beating that drum. The only reason the iPhone 4S sales dropped was because of the extremely poorly kept secret that the iPhone5 was coming out in Oct. Before you declare your hollow victory, check the sales numbers out for the next quarter - post release. Then go cry into whatever cup you have, since it seems you are that emotionally invested in seeing Apple fall.

Personally, I own a few samsung products, they're OK. I don't think in the future I'd pay anywhere near top dollar though. My TV, for instance, sporting nifty brand new features, was obsolete and unsupported within a year. My phones had updates for 8 months. Guess that's how Android phone buyers feel. At least in my case, my primary video source will work just fine with the Samsung TV as a dumb monitor and I certainly didn't like the idea of it being connected to the internet in the first place.

The moral of the apparent segue is you have to stand behind your products or your one-time customers will be just that: one-time. Not a good prescription for staying at the top. Apple excels at keeping customers. Samsung has a lot to learn in this realm. One of the reasons they do not is because they are bottom feeding, and the margins apparently are too low to keep supporting their own products. There's a reason you can only get Apple products in less than 4 configurations, and usually less than 3 meaningful ones.

Re:Inevitable

[gtall]

Yeah, and fairies do the design, right?

Re:Inevitable

[aitan]

even if Samsung doesn't make an Android tablet,

Uh?
Besides their own branded tablets, have you checked which is the manufacturer of the Nexus 10 monster (2560x1600 screen, 16Gb at 400$) that comes out tomorrow?

Re:Inevitable

[Grizzley9]

The Galaxy S3 (their biggest seller) is selling slightly faster than Apple's biggest seller (the iPhone 4s), in terms of units.

Is that units shipped or units sold. I've seen previously where they each use different terminology so it's not a true comparison. Usually for Android it's units shipped, while with Apple it's units sold.

Re:Inevitable

[oxdas]

Sorry. I was replying to the person stating that Samsung was not making money off of their phones and I thought you were commenting on that point.

As for profits on the GSIII:

Most of the financial media single out the GSIII's strong sales to explain the enormous growth in Samsung profits. Considering that their feature phone sales have declined, yet their profits have surged, I think it is safe to say the feature phones are drivers of profit for Samsung.

The numbers:
Samsung Sales 3rd quarter:
feature phones: 2012 48.5 million 2011 59.1 million: net decline of 10.6 million phones
smartphones: 2012 56.9 million 2011 28.1 million: net increase of 28.8 million phones

Telecommunications Profits 3rd quarter: 2012 $4.14 billion 2011 $1.94 billion: net increase of $2.2 billion

Conclusion: Samsung shipped considerably less feature phones versus a year ago, yet posted much larger profits. The feature phones are unlikely to be the driver of profits. Samsung shipped roughly twice as many smartphones since the same period last year and more than doubled their profits from phones. The GSIII represents 18 million of the 56.9 million phones sold (or just under a third of smartphone sales) Given that the GSIII accounted for a high percentage of sales versus a year ago and Samsung's phone profits surged over the same time period, I would say it is very likely that the GSIII's are highly profitable.

Re:Inevitable

[oxdas]

I should have read it first. Should read,

"I think it is safe to say that feature phones are NOT a driver of profit for Samsung."

Re:Inevitable

[MightyYar]

LOL, yup I meant $15.

Re:Inevitable

[MightyYar]

So Samsung's phones made less money but sold more phones? Sounds like we have our answer :)

Re:Inevitable

[aicrules]

a company that loses a dollar is just closer to profitability than one that loses a million. If you continue losing $1 you will eventually go out of business, it just takes slightly longer. You may get more leeway from investors if you only lose $1. But neither is profitable. Profitable means you're getting profit out of it, anything 0 and less is not profitable.

Re:Inevitable

[schlachter]

Wow. Did Apple Maps teleport you upon launch??!!
I've heard it's buggy but that sounds magical!

Re:Inevitable

[Anonymous Coward]

Not the same team that did the iMaps app is it?

Re:Inevitable

[NatasRevol]

To throw a wrench in your calculations:

In the last quarter, Samsung started marking down the GS3 significantly.

Also, where are you getting your numbers? Samsung doesn't release quarterly phone shipments. If you're using estimates, what factor do profits play if smart is over estimated by 10% and features underestimated by 10%?

Re:Inevitable

[bluefoxlucid]

The only reason the iPhone 4S sales dropped was because of the extremely poorly kept secret that the iPhone5 was coming out in Oct.

That is still an opportunity. Consumers may become bored of the hype and anticipation and then become tolerant. A new shin then becomes more attractive. Protracted product release cycles are product-killers: something people have known about for the last 2 years just doesn't gather as much release-day camping as something people just heard about last week via an exciting marketing campaign.

Re:Inevitable

[bluefoxlucid]

Does that mean Samsung will necessarily continue making Android tablets in the future, rather than focusing on their new line of stylus-included smart phones?

Re:Inevitable

[Anonymous Coward]

Apple doesn't suddenly raise prices 20% out of the blue. In fact, they don't change prices much at all (very few "sales" or specials), except to gradually trend them downward over time (a new iPhone 5 costs less today than an original iPhone cost when it first came out).

Re:Inevitable

[Anonymous Coward]

it doesnt mean shit to investors

Apple doesn't pay much in dividends. The only way investors get to make money is by selling Apple stock at a higher price than they bought. I think Apple investors have the same RDF as it's consumers. Somehow they're all going to wait until Apple peaks and then sell.

Re:Inevitable

[crizh]

http://communities-dominate.blogs.com/brands/

Enough numbers there to make your eyes bleed. Tomi is a pretty reputable source apparently. I've certainly yet to see any evidence to the contrary.

Re:Inevitable

[Gr8Apes]

That is true - the problem for Apple now is that with their huge outsourced supply chain and assembly facilities, the only way they're going to be able to manufacture these things in secret is to bring at least some manufacturing and assembly back in house, and definitely prior to the initial announcement.

Re:Inevitable

[Anonymous Coward]

"The Galaxy S3 is a bigger seller than the iPhone."

Thats all well and good, but if you dont make any money off it (and Samsung doesnt) it doesnt mean shit to investors

Apple stock is down over 20% in under 3 months, but those must different investors from the ones you're referring to.

Your fanboyism is showing.

Re:Inevitable

[Anonymous Coward]

The iphone has a higher margin. It's lower powered and has fewer bells and whistles, plus Apple gauges all its suppliers like nobody else can.

Re:Inevitable

[NatasRevol]

They're still 3rd party estimates.

Some people love Tomi Ahonen. Some people hate him. Usually depending on their bias towards Nokia.

But he does have lots of experience in the mobile phone area.

Re:Inevitable

[Damathon]

Having switched, Android is much better than iOS, IMO, and once you break out of the lock-in, there's little reason to go back.

So every person that Samsung knocks away from Apple, is likely a permanent loss for Apple.

I switched from an iPhone to GSIII also and my experience has been different. The bigger screen makes the drawbacks worth it to me, but I wouldn't be able to recommend the phone to everyone. IMO, the iPhone works good enough right out of the box. Android might have more potential, but it takes some work to get right.

Pros:
- Bigger screen size, screen size options
- External memory card support (kind of)
- Discounts
- Can carrier unlock

Cons:
- Google/Samsung/Carrier branded apps. My AT&T SIII came with a "Messages", "Messaging" and "Messenger" app. In addition to the "ChatON" and "Talk" apps. There's also a "Play Music" vs "Music Player" and "Email" vs "Gmail". I can imagine the support nightmares if I bought one for my parents.
- External memory card support depends on app (Ex: Spotify's current version has no support). Also, GSIII doesn't properly support ExFAT and it doesn't format an ExFAT card to FAT32 or let you know. In my case, files would disappear and there were a few 'card unreadable' errors before I did some research.
- Doesn't charge properly in computer or car USB ports. I assume this means the GSIII isn't requesting high-power (http://en.wikipedia.org/wiki/Universal_Serial_Bus#Power)
- Difficult to sync media. I don't particularly like iTunes, but it seemed to get the job done.
- Slow updates.
- Doesn't work as well with my car's Bluetooth. This may not be a Samsung issue, but iPhone tends to get more third-party testing and support because of the volume.
- Doesn't support Bluetooth Smart sensors (Bluetooth Low Energy) even though it uses the same chip as the iPhone and advertises that support.

Re:Inevitable

[HiThere]

Well, as others have pointed out this contract runs for a couple of years. Also, some of the "competitors" that Apple is throwing money at appear likely to die anyway. Sharp, perhaps?

Additionally, Samsung is selling it's own models quite well. Perhaps they figure they'll need their own fabs themselves. AND yet more additionally, setting up a fab requires lots of money and lots of expertise. And IIRC, Apple got out of the chip manufacturing business quite awhile ago. (Around the time of the Mac II?) So while they've got the cash, they may well not have the expertise to either do it themselves, or the judge the expertise of others.

*I* think that when Apple decided to antagonize Samsung, they made a very bad strategic move.

Re:Inevitable

[MightyYar]

I have to confess that I don't really keep up with the trials and tribulations of Samsung and Apple, but my understanding was that Apple had learned their lesson and now has a policy of not relying on a single vendor if it can be helped. For instance, there are at least three vendors of the iPhone 5 screen. So as you say, Sharp is not looking great, but Apple still has 2 other suppliers to fall back upon.

Re:Inevitable

[savuporo]

>>Apple could potentially hire someone to design replacement microprocessors and build them at TSMC

One does not simply "hire someone to design replacement microprocessors".

Years of institutional knowledge, team experience, wealth of libraries and design tricks, professional relationships between key people and many other factors make this ambition vary hard to fulfill. It's possible, but it takes years - having a ton of cash to throw at the problem helps, but does not substitute for time.

Re:Inevitable

[viperidaenz]

The GS3 is made of expensive parts, but guess who makes every single part?

Re:Inevitable

[viperidaenz]

The data supplied by TomTom isn't at fault. TomTom's own GPS devices are actually very good.

Re:Inevitable

[Anonymous Coward]

I have an Android phone and an iPad, the reason why is when I wanted to buy I looked at the market to see what was the best available, if you drop all the fanboyism then its hard to that there are better tablets available that the iPad. That may all change in the future but why buy second rate gadgets because of some misguided brand loyalty.

Re:Inevitable

[rat_herder]

I've browsed Apple maps extensively in Australia and while the results are not perfect, it's close enough to be an excellent mapping service. Just to be clear it's not as good as Google Maps but is that unexpected?. I have spotted 4-5 errors in total and yes one of them was a town name in the wrong location. These issues did not cause me any problems because i was instinctively aware that Mildura is not in the middle of a salt lake. The exaggeration of the problems is lame. I'm not defending Apple, but the mapping service is actually pretty good.

Re:Inevitable

[HornWumpus]

The iPhone 4s also had multiple vendors for the screen.

Just search any apple forum and read all the fanboys learning how to get a 'good one' (Samsung screen).

Re:Inevitable

[HornWumpus]

Know anything about capitalizing development costs? Didn't think so.

There are many tricks in bean counter land.

Re:Inevitable

[mk1004]

The presumption is that they would hire someone who knows something about microprocessors. It looks like they may have that in P.A. Semi, which I was not aware of. I'm guessing that they are the ones who designed the A4, A5, and now A6 processors for Apple.

Re:Inevitable

[steelfood]

Except Samsung's biggest customer might be themselves. While Apple's contract is large parts-wise, it doesn't account for much of their income, much less the profit.

I don't see Apple jumping fabs anytime soon, not if they want to keep their price to performance point. There are cheaper foundries that are slightly older and make slower and needier chips, and there are more expensive foundries that make faster chips.

Perhaps if Apple wasn't forced to compete on speed and battery life, they'd be able to switch foundries by keeping their processor generation the same for one iteration. But with Android products pushing their hardware along, it's not a realistic plan, at least not until the cheapest ARM processors have reached the point x86 processors are at (i.e. good enough).

Like I said elsewhere, they might actually have had plans to switch suppliers all along. It'd be stupid of them to sue Samsung, of all the Android manufacturers. But I suspect these plans fell through, or got delayed. In fact, I wouldn't be surprised if some other foundry came to Apple and promised them the ability to switch by a certain date for a certain price, prior to Apple initiating their lawsuits, and said foundry ultimately was unable to make that date or the price point or both.

Re:Inevitable

[MightyYar]

Not that this is based on anything at all, but Intel has an ARM license AND they make ARM-derived chips on contract for Netronome...

Now, it certainly gets in the way of their ATOM strategy, but if Apple could convince Intel to use their process tech to make Apple's A6, you'd have something that Samsung couldn't touch. Then there's this rumor of Apple making an ARM version of the MacBook. Could there be a way to do this without hurting the relationship with Intel?

So yeah, TSMC is the only obvious alternative to Samsung, but I think things could still get interesting given the amount of money involved.

Re:Inevitable

[BronsCon]

This. And because of this, were Apple to make a 1:1 clone of the GS3 (and Samsung were to allow it), it would cost Apple considerably more than it costs Samsung. Furthermore, because of this, Samsung can put more advanced parts in their phones than Apple, sell at the same price point, and reap the same profit margin. Of course, they go a step further and put even more advanced technology in their devices (720p screen, NFC, more recent Bluetooth, etc), sell at a slightly lower price point, reap a bit less per-unit profit, and watch their market share grow as Apple's dwindles.

Don't tell me you think they'll continue sacrificing their profits once Apple's gone. No, that's when they keep doing what they're doing, but at a price point equal to, or a bit above, what Apple currently charges.

You don't play much chess, do you?

Re:Inevitable

[Anonymous Coward]

Seriously? 1.5 million for a purchasing guy? And just one of the guys?

Re:Inevitable

[MightyYar]

LOL, yeah, clearly I was off by an order of magnitude.

Re:Inevitable

[Anonymous Coward]

Surely Apple Maps can find Ecuador. Ecuador is huge!

Re:Inevitable

[digitalchinky]

Ahh, I see what you did there good sir. Choices. Hand crafted analogue amplifier filled with the soft orange glow of a hundred valves, or a solid state device encased in an anodized alloy box lighting up the room with insanely bright blue LED's - both produce identical output. Which to pick... It appears that in your world one of these is a better choice, I think you are wrong though.

Re:Inevitable

[Gnulix]

I can imagine the support nightmares if I bought one for my parents.

It's easy to either delete or hide the application that you don't want them to use.

External memory card support depends on app

I think we should be thankful that it is possible to use memory cards at all. I guess some vendors believe that it will be easier to pirate stuff if you can place their programs on a memory card.

Slow updates.

If you wanted bleeding edge updates, you should have chosen a Nexus device

Re:Inevitable

[Anonymous Coward]

Here's a protip to ease the pain:

If you're not in any rush, Google often has stupid cheap sales annually (typically to mark some special occasion -- probably just as an excuse to throw a party). Two years ago, they had a 10 cent sale, and this year, a 25 cent sale.

There's also the humblebundle.com for some games.

In the US, you can install the Amazon app store for their freebie of the day.

Getjar offer a metric ton of Android, Java (feature phones) and other platforms for FREE.

Re:Inevitable

[Damathon]

This really just supports my main point: iPhone works better out of the box and Android needs work to get it right. IMO, iPhone is better for the non-technically inclined.

If you wanted bleeding edge updates, you should have chosen a Nexus device

The vast majority of Android devices sold are carrier branded. It's a fair criticism to say that Android devices have slow updates. Apple is definitely open to criticism over their closed model, but there are plenty of benefits that come from developing both SW and HW and forcing carriers to play by their rules.

Re:Inevitable

[Plumpaquatsch]

Huh? Samsung doesn't make money off of the GS3? Then why are the most profitable Android device manufacturer?

Because they also sell Bada and Windows phones.

Re:Inevitable

[Plumpaquatsch]

Samsung Electronics made profits of about $6 billion last quarter on revenues equal to 19% of South Korea's entire GDP. While not quite Apple's $8 billion over the same period, I don't expect to see Samsung execs begging for change anytime soon.

You are aware that "Samsung Electronics" is a big supplier of household appliances, TVs, consumer electronics worldwide? Not to mention all the other stuff they make.

Re:Inevitable

[Plumpaquatsch]

According to Samsung Electronics, two-thirds of their $6 billion in profits last quarter came from their smartphones.

This is about the same percentage for Apple, the iPhone, and their $8 billion in profits last quarter.

http://www.bloomberg.com/news/2012-10-25/samsung-profit-beats-estimates-on-surging-sales-of-phones.html

Is this so? "More than two-thirds of the earnings were generated by the telecommunications business" - so is this their (smart) phones, or is this their Samsung Telecommunication Systems Business division, "one of the world’s leader in 4G wireless technology and network infrastructure.

It provides cutting-edge LTE solutions to more than 30 mobile network operators and Mobile WiMAX solutions to about 60 operators worldwide.* Samsung partners with leading 4G operators around the globe, including Sprint and Clearwire in the U.S., UQ Communications in Japan, YTL Communications in Malaysia and Mobily in Saudi Arabia."

Re:Inevitable

[Plumpaquatsch]

Just curious, where do you live? If it's the US, the problems were very minor there in comparison to other parts of the world.

Like in China, where it beats the crap out of Google Maps?

Is it a special price hike?

[Anonymous Coward]

Or is it the removal of a special price break?

If farmers told the supermarket chains to go eff themselves and that they can pay the same price as any other wholesaler, then this would be opined by those supermarkets as "a price hike".

Whereas it is instad the removal of a special price.

(cf removing temporary tax cuts becomes a tax hike to those affected...)

Re:Is it a special price hike?

[MightyYar]

Isn't that just semantics? At the end of the day, if you have to pay more from one day to the next - that's a price increase.

Re:Is it a special price hike?

[Anonymous Coward]

current policy dictates, that you can't discriminate prices.
EVERY price is special!

"no price left behind" "no price left behind"

Re:Is it a special price hike?

[theendlessnow]

Agreed. I think Samsung is only wanting to increase prices for customers buying in quantities of 250,000 or larger. However, I hear that Apple is more open to the idea of increasing prices for quantities of 1,000,000 or larger. Gridlock....

Re:Is it a special price hike?

[Anonymous Coward]

Isn't that just semantics? At the end of the day, if you have to pay more from one day to the next - that's a price increase.

There's actually a significant emotional difference. Raising the suggested price generates backlash on consumer products, but removing discounts does not, as long as the discounts are overt.

Of course, this is a b2b transaction, so that principle doesn't really apply.

Re:Is it a special price hike?

[MightyYar]

Of course, this is a b2b transaction, so that principle doesn't really apply.

Yes, accountants don't have emotions :)

Re:Is it a special price hike?

[Andy Prough]

Wrong - we (accountants) do have emotions. Why would you not consider cold, ruthless greed an emotion?

Re:Is it a special price hike?

[Anonymous Coward]

Cable company offers you an introductory offer. You get accustomed to paying half-off for cable services. Introductory offer expires. You pay more, but it's not a price increase.

Hint: The discount is only offered to get you hooked. Apple is hooked, so the plan worked.

Re:Is it a special price hike?

[MightyYar]

I consider it a price increase, and I call to cancel and then they extend the "discount".

Re:Is it a special price hike?

[ArhcAngel]

Never play semantics with a politician. To them a 6 Billion dollar tax hike is considered a tax cut because they were "considering" a 10 Billion dollar hike. I imagine businesses play these games too. I was working at Compaq when hp took over. They found out Compaq was paying a couple of dollars less than hp for the same HDD and they were pissed.

Re:Is it a special price hike?

[MightyYar]

I've always loved this. Look at the current budget negotiations - they are talking about "cuts", yet the budget still grows. One time I saw a news show where the host said, why can't we just freeze spending and let the economy grow until the deficit disappears? The politician argued that it would mean deeper cuts than anyone in DC was proposing... LOL! To a politician, a spending freeze equals a "cut"...

Re:Is it a special price hike?

[Nostromo21]

There's an ACTUAL difference. In order to qualify for getting a special price/discount, you need to be, well, *special* to a supplier. I don't think being sued by your customer makes most suppliers feel special. And they are not obliged to sell stuff to you at any price, last time I checked the law, anti-competitive BS notwithstanding. Ergo, simple cause & effect. You die Apple, you go to hell & you DIE, MUHAHAHAH!!! >8^D

Re:Is it a special price hike?

[Nostromo21]

You sure you're not really a lawyer or politician...?

Missing information

[aliquis]

Also the contract is a long-term one running until 2014.

Re:Missing information

[NatasRevol]

More missing info.

Current chip price: $17.50/phone
After increase: $21.00/phone

$3.50 increase per phone adds up to about $87M cost increase per quarter (assuming 25M iphone5/ipad4 per quarter)

That's like half a day of free cash flow from Apple's operations. For the whole quarter.

It's more of a piss Apple off than actually affect their business/profits. Which doesn't seem like a great business move from Samsung, seeing as Apple is their biggest chip customer.

Re:Missing information

[MrDoh!]

And their biggest competition. If 25M iphones can't be made/sold, thats' 25M SIII's that can be sold. Someone's probably run the numbers and figured out that it's now worth telling Apple to bog off.

Re:Missing information

[NatasRevol]

If 25M iphones can't be made/sold, thats' 25M SIII's that can be sold

That's not true; it's not an either or.

Also, were talking about jacking up prices $3.50. They're not stopping them from being made or sold.

Someone's probably run the numbers and figured out that it's now worth telling Apple to bog off.

Or more likely, they finally recognized that Apple is going to leave sooner or later, and they better make money off of them before they're gone.

Re:Missing information

[ArcadeMan]

That's like saying an Xbox gamer won't think twice about switching to a Playstation. Accountants are no good at evaluating how people take choices.

Re:Missing information

[symbolset]

I'm pretty sure Samsung's biggest chip customer is... Samsung.

Re:Missing information

[Anonymous Coward]

Somehow I don't think all those Apple customers are going to put up with Android's idiosyncrasies.

Maybe you need to watch less Samsung advertising.

Re:Missing information

[Anonymous Coward]

That would mean it would take ten quarters for Samsung to get a billion dollars. Assuming modest growth, Apple will sell enough iPhones and iPads to give Samsung that billion dollars by the end of the contract in 2014.

Seems Samsung found a way for Apple to pay for it's own court judgement (should it come to pass).

Re:Missing information

[BronsCon]

With over a decade of buying exclusively Apple products in any market they enter, I'd say my boss is one of those Apple customers. He's absolutely enamored with the HTC One X he bought last month after the disappointing letdown that is the iPhone 5 was announced.

Cue the Nelson...

[Anonymous Coward]

...picture captioned with "Ha-Ha"

This is known as

[mknewman]

Global Thermonuclear Warfare. Looks to me like escalation has begun. Loser will be end users. Buy stock in both Apple as well as Samsung as higher prices mean higher profit margins.

Re:This is known as

[Fwipp]

I'm not really sure what kind of crazy logic you're using. Companies spending money infighting = higher costs = lower profit margins. Otherwise this would be a *good* thing for them (and they would negotiate to pay the highest possible price).

Re:This is known as

[mwfischer]

Maybe not so much.

However we don't get to see full nuclear warfare because Tim Cook isn't Steve Jobs. Tim Cook is a peace maker. Steve Jobs was a psychopathic OG.

If we wanted great entertainment, Steve Jobs, I honestly believe would spend hundreds of billions to just fuck Samsung.

Re:This is known as

[Zeromous]

No way! I'm getting rich on Rubber Boot futures!

Re:This is known as

[tgd]

Global Thermonuclear Warfare.

Looks to me like escalation has begun. Loser will be end users. Buy stock in both Apple as well as Samsung as higher prices mean higher profit margins.

Its probably best for Apple's users, anyway. They've all got Stockholm syndrome at the moment, but once they're freed from that incarceration, they can start the long road to recovery.

Re:This is known as

[pla]

Otherwise this would be a *good* thing for them (and they would negotiate to pay the highest possible price).

They would very much like to do so, but we call that "collusion" and have a whole slew of laws making it illegal.

Re:This is known as

[dietdew7]

It makes perfect sense, I bet the parent is a Keynesian.

Re:This is known as

[History's Coming To]

The thing is, companies often raise prices to "offset higher costs" but it's a fairly convoluted area. Take a pub as an example: imagine a pub sells a gin & tonic at £2, £1.50 for the gin and 50p for the tonic. If they give the option to get a double gin and tonic for £3 are they making a smaller profit margin compared to the single? It certainly looks like it.

However, the cost of the drink isn't the only thing to take into account. When the drink is served the pub also has to factor in the fixed costs: the wages, electricity, glass cleaning etc etc, and this figure does not change when serving a double (OK, maybe slightly on the wages by a second or two), so the margin on the double can actually be higher than on the single.

So if Apple were to raise the price of an iPhone by £5 and the chip costs them £5 more per unit then Apple will make more money on each unit. Even if they subsidise the new cost to the tune of 50% they'll probably still make more money in the long run.

Re:This is known as

[gstoddart]

Its probably best for Apple's users, anyway. They've all got Stockholm syndrome at the moment, but once they're freed from that incarceration, they can start the long road to recovery.

I'm sorry, but after years of Microsoft's half-assed or insecure offerings, Linux alternatives which would require jumping through all sorts of hoops to get only most of the functionality ... I'll take my iPad which worked straight out of the box on day 1, and has done so since.

I think you're confusing Stockholm syndrome with "bought a product they're happy with".

Despite all of the bile on Slashdot directed at Apple, outside of here, people with Apple products tend to be quite pleased with them.

Re:This is known as

[Anonymous Coward]

So if Apple were to raise the price of an iPhone by £5 and the chip costs them £5 more per unit then Apple will make more money on each unit.

You want to re-check your math. Hint: If that bar selling gin+tonic for £2 would buy the gin for £1.50 and the tonic for 50p, they'd lose on every gin+tonic they sell.

Re:This is known as

[History's Coming To]

Gin cost per measure: £0.50
Tonic cost per measure: £0.05
Fixed costs per drink: £0.50

Selling cost of single: £2
Gross profit on single: £1.45
Net profit on single: £0.95

Selling cost of double: £3
GP on double: £0.95
NP on double: £1.45

Hence the net profit can be higher even if the gross profit drops (ie chip cost goes up) as long as you can pass on some of this cost (doesn't need to be all of it) and if your fixed costs aren't affected.

Re:This is known as

[jedidiah]

Overgrown iPods are not PC tablets.

On the other hand, there's a wealth of suitable competitors now. There are plenty of other companies making good enough alternatives.

Unless you into buying DRM-laden media from the Apple company store, you really don't have any reason to feel trapped.

Re:This is known as

[Time_Ngler]

How can the GP be less than the NP on the double? That's some crazy math you're doing

Re:This is known as

[gstoddart]

Overgrown iPods are not PC tablets.

You're right, but I'm still be convinced that the tablet market wants to be "PC tablets" -- Microsoft's vision of it being something I can access Exchange and Excel with? Not so much. Microsoft still hasn't grown past the point of understanding that there's more to life than spreadsheets and corporate email -- and most of what I use my iPad for has nothing to do with either.

There are plenty of other companies making good enough alternatives.

Well, "good enough" is subjective ... my wife's BB Playbook is a little flaky, and my brother's Android tablet underwhelmed me.

Unless you into buying DRM-laden media from the Apple company store, you really don't have any reason to feel trapped.

You make the presumption that people "feel trapped". I've never actually bought any DRM-laden media from Apple, nor do I plan to. But working with my existing iTunes was a huge plus for me. The fact that digital copies of movies works with it is even nicer, since I really prefer to have a digital copy as well. I'm betting an Android tablet isn't allowed to do that due to the DRM.

You don't have to personally like Apple or their products .. but you're largely talking out of your ass if you actually believe all of the people who have bought these products feel trapped by their decision. Outside of here on Slashdot where everyone wants to hate on Apple the way we used to hate on Microsoft ... people actually like these products and are happy with them.

A friend recently upgraded his cell phone to an iPhone (free upgrade from the carrier). And he immediately found himself going "dammit, this is actually much better than what I've had the last few years".

At the consumer level, people actually really like the products.

Re:This is known as

[History's Coming To]

My bad, typo - plus I should have included the percentages to make it clearer.

Gin cost per measure: £0.50
Tonic cost per measure: £0.05
Fixed costs per drink: £0.50

Selling cost of single: £2
Gross profit on single: £1.45 (72%)
Net profit on single: £0.95 (47.5%)

Selling cost of double: £3
GP on double: £1.95 (65%) [corrected from £0.95)
NP on double: £1.45 (48.3%)

GP drops in % terms but the NP increases with the larger measure, despite that second shot being cheaper for the customer than the first. Basically, my point is that if Apple can pass on a fraction of the price rise they've been hit with and still make higher profits per unit.

Re:This is known as

[Fwipp]

It's still a lower profit than they would have made if their costs hadn't gone up. Even if they offer a two-for-one iPhone special (which they could just as easily have offered before the cost hike).

Re:This is known as

[CnlPepper]

I think your maths suffered from one to many G&Ts..

single:

    2.00 - 0.55 = 1.45 GP (72.5% selling cost)
    1.45 - 0.50 = 0.95 NP (47.5% selling cost)

double:

    3.00 - 1.10 = 1.90 GP (63.3% selling cost)
    1.90 - 0.50 = 1.40 NP (46.7% selling cost)

Re:This is known as

[Anonymous Coward]

I'll take my iPad which worked straight out of the box on day 1, and has done so since.

Quick, change the MTU on your wireless interface to that you can connect to the corporate WLAN.

What's that, you can't?

In other words: it Just Works where "Works" is a rigidly-defined set of use-cases. Apple users convince themselves that they don't need anything else.

Re:This is known as

[_xeno_]

The fact that digital copies of movies works with it is even nicer, since I really prefer to have a digital copy as well. I'm betting an Android tablet isn't allowed to do that due to the DRM.

You're going to have to explain what the fuck you're talking about here, because I'll bet you're either wrong or are complaining that Android doesn't use Apple's DRM. Of course it doesn't, Apple won't even allow other companies to use rounded corners without suing.

But Android can play more media files than iOS can, simply because you can install things like VLC on Android - something that Apple won't allow you to do on iOS.

Re:This is known as

[gstoddart]

You're going to have to explain what the fuck you're talking about here, because I'll bet you're either wrong or are complaining that Android doesn't use Apple's DRM.

No, not Apple's DRM .. whatever the studios use. Buy a movie with a digital copy, your options (as far as I can tell) are Windows Media Player and iTunes to redeem it and be able to play it -- because the studios themselves have applied the DRM and decided that they trust. Have they extended that trust to Android? To Linux?

This has little do with with Apple's DRM, but the studios. Since I prefer to buy Blu Ray titles with the digital copy, I like to have it. I know you can do it in iTunes. I suspect you can do it in the Windows Music Player. I highly doubt that they've made it do-able on Android or Linux.

As to rounded corners ... well, that's a manifestation of the fscking broken patent system. If the USPTO granted a stupid patent, these are the consequences of it. Personally, I think design and software patents are a joke, but they issue them. Unfortunately, once a stupid patent has been issued the lawyers take over and do their thing.

Re:This is known as

[517714]

... people with Apple products tend to be quite pleased with themselves. FTFY ; ) I think if you observe closely, you will find the same smugness to be prevalent in Linux Users, Windows Users, etc.

Re:This is known as

[_xeno_]

So when you say "digital copy" you don't mean an actual digital copy, you mean a brand name thing that Blu-ray does. I suppose I should have guessed that since "digital copy" would apply to basically every thing a computer ever does and is a stupid term (as the movie on the Blu-ray disc is digital in the first place), but, in any case: pocket BLU

That took all of one second of Google to find. And then a bit more to determine that, yes, that's the official way to play supported "digital copy" Blu-ray discs on your Android device.

Re:This is known as

[Karlt1]

As opposed to the DRM free media from Google, Amazon, and Microsoft?

Re:This is known as

[Karlt1]

You're right, Apple won't allow third party apps that play movies using different codecs. I'm just imagining that I've been using Flexplayer for years.....

Re:This is known as

[blind monkey 3]

You've only calculated one measure of tonic for the double and you've increased the price of the double by twice the cost of the additional gin which is higher than their net profit (50% is higher than 47.5%) this has raised your net profit. If you hadn't skimped on the tonic, the percentage net profit would have been lower
Even if Apple only passed on the additional cost to the consumer, they would make less profit per unit.

Re:This is known as

[hpoul]

android is not a desktop OS, can you copy your blu ray with your ipad?

Re:This is known as

[_xeno_]

Since I just wound up looking this up, I might as well answer it: "yes" in giant air quotes.

"Digital copy" is a thing that comes with certain Blu-ray discs. It's really just a special download code that allows you to stream a low-quality version of the movie to a computer or mobile device.

And that's it.

So you can access your "digital copy" via iPad, because you're not really copying it off the Blu-ray, you're just streaming a low-quality version off the Internet.

Re:This is known as

[blind monkey 3]

I'm curious, what's flaky with the Playbook? I've got one and the only issue I have with it is the number of apps available. I've had it for over a year and the only restarts have been on upgrades.
I have had Android apps crash (ones that I repackaged for Blackberry) but the OS kept working fine.

Apple make fine products but are lacking in features and have constraints imposed that might be important to others - even if those features and constraints are not important to you (or your friend).

Re:This is known as

[Anonymous Coward]

>> There are plenty of other companies making good enough alternatives.

You might be satisfied with "good enough". I'm not. When I can get the best for approximately the same price as "good enough", I choose the best.

Re:This is known as

[Anonymous Coward]

Gin cost per measure: £0.50
Tonic cost per measure: £0.05
Fixed costs per drink: £0.50

Single cost = 1 measure gin + 1 measure Tonic + Fixed cost = £1.05
Net profit = Sells for - Single cost = £0.95
Double cost = 2 measure gin + 1 measure Tonic + Fixed cost = £1.55
Net profit = Sells for - Single cost = £1.45

 

Re:This is known as

[Nostromo21]

Just like Hitler (Godwin!), fighting a war on too many fronts is a losing proposition. And where Samsung is Apple's Russian Winter, Google, should they be stoopid enough to go directly all-out after them, will be all the Allies rolled into one on all fronts up the rear end & it will be sayonara suckas! :)

Re:This is known as

[Nostromo21]

Sure, mostly non-tech people with NFI about using 95% of the features & usually for all the wrong reasons, such as 'it's an Apple!' or 'it just works' or 'look at my new white shiny precious!'. I could get a toaster or fridge these days that can just do email, FB/twitter & browse the web.

http://www.youtube.com/watch?v=FL7yD-0pqZg

Anecdotal examples: I can play Wolfenstein or Doom in DosBox on my S2 for *free*. Does IOS even allow you to run an emulator of any kind or natively browse/manipulate files lol? Or just drag/drop a media file straight over a wifi file share from your main PC?

Let's just say my last & one & only experience with trying to copy a simple ebook to a fucking iPhone costed me several hours of wasted time. Try setting up an Apple ID or appstore/iTunes without a CC, then syncing a non-std file like an ePub using iTunes just wouldn't work no matter what this IT pro of 30years tried, not to mention needing a 700MB iTunes update on a phone that was only 4months unused at that stage, which took all night; and THEN still not wanting to sync that fucking 20K epub file after trying 20 diff ways *sigh*....just emailed it to my gmail & got it out as an attachment in the end. NEVER again!!!

Re:This is known as

[steelfood]

Above a certain price, people who value their own money will lose interest. Sadly, in the end, it'll just end up coming out of mommy and daddy's retirement savings or some kid's college fund.

So????

[Ancient_Hacker]

So it's what, a $4 increase in a BOM that totals out around $200? This is news?

Re:So????

[K. S. Kyosuke]

Are you joking? This will decrease Apple's profit margins from $300 to $296 per unit! The horror! They will have to lay off some of their Chinese workers, of course. No way they can afford them now.

Re:So????

[Anonymous Coward]

The chip costs $10.75

http://www.theinquirer.net/inquirer/news/1719652/iphone-cost-usd18751

So a 20% increase is only around $2

Re:So????

[Missing.Matter]

That's the iPhone 4. The iPhone 5's A6 chip (two generations newer) costs an estimated $17.50. So a 20% increase is $3.50.

http://www.isuppli.com/Teardowns/News/Pages/Many-iPhone-5-Components-Change-But-Most-Suppliers-Remain-the-Same-Teardown-Reveals.aspx

Re:So????

[Anonymous Coward]

Well, you're forgetting about how much this will inflate the padding the gets put towards executive compensation. Genius(tm) Leadership doesn't come cheap, you know.

Re:So????

[Anonymous Coward]

You obviously are not a businessman apple will layoff people or piss off the shareholders. They are a business they will layoff people .

Re:So????

[Sassinak]

Actually remember, Samsung holds patents on several parts apple is using..
So the actual cost may not be 4 dollars.. might be closer to 10.. (just on the iphone).. what about the ipad(s), laptops, desktops, appleTV.. etc...

So net increase to apple (Across the product portfolio) may be something like 50 dollars.. PER device made.. (doesn't matter if its sold or not).. and don't forget.. rejects/faulty devices still require the increase.

Its certainly not putting anyone our of business.. but its a healthy chunk of change for Samsung.. a little reminder/sting to apple.. ("Do you REALLY want to f*ck with us?"), and helps to finance this insane zealot war that apple is pushing.

Re:So????

[gQuigs]

Estimating from this chart*: about 40 million iPhones sold each year (it actually was increasing, so this is an underestimate), would bring in an additional 140 million dollars for samsung per year. And if you are Samsung, you know that Apple has got to be considering moving suppliers - but they have no current options! I would charge at least $25 more, which would make up the 1 billion dollar settlement.

*http://www.asymco.com/2012/02/16/ios-devices-in-2011-vs-macs-sold-it-in-28-years/

Re:So????

[History's Coming To]

20% of $200 is $40, unless I've misunderstood your comment?

Re:So????

[K. S. Kyosuke]

Yes, you've misunderstood his comment.

Re:So????

[Anonymous Coward]

They will have to lay off some of their Chinese workers, of course.

I would never lay off my Chinese slaves. Maybe just withhold dinner.

Re:So????

[Sollord]

Will probably see sometime early in Q1 Samsung and Apple will reach a patent deal for $4-$5 an android phone. It's all smoke and mirrors for investors

Re:So????

[similar_name]

If they can just lay off workers why did they have them to begin with?

Re:So????

[the computer guy nex]

Estimating from this chart*: about 40 million iPhones sold each year (it actually was increasing, so this is an underestimate), would bring in an additional 140 million dollars for samsung per year. And if you are Samsung, you know that Apple has got to be considering moving suppliers - but they have no current options! I would charge at least $25 more, which would make up the 1 billion dollar settlement.

*http://www.asymco.com/2012/02/16/ios-devices-in-2011-vs-macs-sold-it-in-28-years/

Apple is expected to sell 47 million iPhones this quarter, so your estimate is a tad low.

Re:So????

[tukang]

$4 a unit is a huge amount in the manufacturing world where businesses try to reduce per unit manufacturing costs by fractions of a penny.

Apple sold 5 million units of the iphone 5 in the first 3 days of its release and last year Apple announced that they had sold over 100 million iPhone units world wide, so at a $4 per unit savings they paid nearly half a billion dollars less than what they would have at the new price.

Re:So????

[slashmydots]

Sadly, they probably will, lol. They seemed sort of psycho about gigantic cash reserves and massive, ridiculously high profit margins. So they'll never take a $4 hit without doing something about it. God forbid they only make 21 billion instead of 22 profit.

Re:So????

[oxdas]

Samsung makes components for many companies. Samsung also competes with most of those companies with its own products. Samsung's biggest selling point to their competitors is that there is a wall between their components and retail businesses. If they broke down that wall for Apple, it would make the rest of their customers very nervous. This is the primary reason why we have not seen Samsung using components as leverage. I suspect this price increase is more because of Apple's reduced business.

Re:So????

[Fwipp]

20% of $10 = $50?

What is with people's math today...

Re:So????

[Splab]

HTC settled because they are going south as fast as Nokia.

Samsung has won more battles than Apple across the globe, the biggest "win" so far is scored by Apple, but that one will most likely be severely lowered (Samsung could also have some of their wins lowered in appeal, but the way Apple has acted in the UK, its looking grim for them).

I seriously doubt Samsung will settle, I think (and hope) they will fight Apple to the bitter end.

Re:So????

[vakuona]

Maybe he is a republican!

Re:So????

[vakuona]

Manufacturers other than Apple. Apple is sitting on crazy margins, and the can afford a small hike in component prices. Companies who are racing to the bottom, not so much. This is why Apple will have a 10% market share in smartphones in the future, and still be making more money than the rest of the industry combined.

Re:So????

[Osgeld]

37,000,000 just in iphone sales last year * 4$ = Id take that

Re:So????

[Nostromo21]

Bottom line guys, the only maths you need to know is that Samsung is double the size of Apple (revenue & equity holdings) & several times larger as far as infrastructure & number of people go. Not to mention the diversity of goods they produce as compared to Apple's i-Crap.

If that's not enough, others have already reiterated the obvious: Apple needs Samsung for supplies, Samsung only needs Apple for a very small chunk of their profits. The rest of the maths & how this war will turn out requires no guessing on anyone's part. :)

20% eh?

[Jintsui]

So, everything Apple sells with a Samsung part will now become 20% more expensive?

Re:20% eh?

[MachineShedFred]

No, because we're talking about $3.00 per device. Apple will eat it, and instead start building up other foundry companies to build the Ax SoC's and take the billion dollar business away from Samsung.

Typical case of small short term gain, big long term loss.

Re:20% eh?

[Anonymous Coward]

Likely not. iPhones seem to be like video games when it comes to pricing; they're sort of expected now to be a certain price. It took video game publishers a long time to come out of the $50 price point set in the 90's to the current $60 point.

Apple's in the same boat, not as much but it's still there. Their consumers expect a certain price point; if the iPhone 5 at it's lowest storage capacity costs $599, consumers will find it hard to suddenyl accept the same phone for $719. Especially now with many viable alternatives through Android phones, including the Samsung Galaxy, moving that price point up for Apple might lose them more customers and further reduce revenue already. No, this is much more likely to affect Apple's profit margin before it comes back and affects consumers.

Re:20% eh?

[jareth-0205]

No, because we're talking about $3.00 per device. Apple will eat it, and instead start building up other foundry companies to build the Ax SoC's and take the billion dollar business away from Samsung.

Typical case of small short term gain, big long term loss.

Well... maybe, depends on whether Samsung are figuring that that's the route Apple is taking anyway (Apple have taken a few pieces of iPhone in-house recently to save costs) and are making hay while they still have a competitive advantage. If Samsung guess that Apple will eventually transition away from them as a supplier (and given the ongoing animosity, it's not a bad guess) then while they are they will want to squeeze their customer.

Re:20% eh?

[Anonymous Coward]

So, everything Apple sells with a Samsung part will now become 20% more expensive?

Don't be silly. Of course not. It'll mean they become 80% more expensive, especially after the extra printing costs required to include the smug note passively-aggressively suggesting the extra cost that customers NEED to pay is Samsung's fault. It'll also stop all sales of Apple products for at least 14 days, as it'll take them that long to write the note.

Re:20% eh?

[Anonymous Coward]

No, 120%. Learn to MacMathics. And in the end, you'll still gladly pay for it.

Re:20% eh?

[Anonymous Coward]

Apple has been trying to cut off Samsung as a supplier for the past two years or more, so they were certainly going to do that anyway. Might as well get a few extra bucks per unit on the way out.

Re:20% eh?

[Splab]

Samsung has told Apple to go eff themselves when current contracts expires, they are already figuring Apple is done with them one way or another.

And building a factory and staffing it isn't something you just do over night. Even with billions of dollars in your warchest, getting the right workers, setting up supply chains and learning how to deal with all those pesky issues you get when you have a factory, will cost Apple a lot.

Re:20% eh?

[Anonymous Coward]

I wonder if Samsung has processor patents that Apple will need to step on to make their on part?

    (That would be fun to watch;-)

Re:20% eh?

[Anonymous Coward]

It looks like Samsung does not think any other company can supply the same quality and quantity for a lower price, including the risk of doing business with Apple. Would you really want to be Apples next suppler after they sued the previous one for billions ?

Re:20% eh?

[Anonymous Coward]

Until they find that Samsung have some very essential patients that they would have to license to build it themselves...

Consumers lose again.

[JasonDT]

And once again the consumer will pay for these bullshit patent wars... Samsung loses patent suit...charges Apple more to make up for the loss... Apple passes that cost off to consumers... Awesome....

Re:Consumers lose again.

[Anonymous Coward]

You can always buy a non-Apple product...

Re:Consumers lose again.

[JasonDT]

And I do... but this kind of nonsense inevitably affects the entire market... Apple raises prices and people still buy their products... Then other vendors raise their prices too... I know it's how our free market works... prices set at what the market is willing to pay... but it chips away at our power as the consumer (I hate that word by the way).

Re:Consumers lose again.

[mvdwege]

I wish people who use that stupid 'business just passes the cost off to the customer' meme took an economics 101 class, or a basic class in business administration.

Here's the deal: if the demand is high enough that Apple is capable of passing on that cost to the customer, they should have (and would have) hiked their price already. To do otherwise would have meant to pass on profit.

And how much is this, really?

[Anonymous Coward]

The A6 processor is estimated to be $17.50 [iSuppli]. Whatever chip that the article refers to is likely to cost less than that. So we are talking at $2-$3 per iPhone? Apple can easily swallow that. Samsung is really asking to be shown the door, it's only a matter of when Apple moves to another supplier.

Re:And how much is this, really?

[Anonymous Coward]

Yup! I'm rather surprised Apple isn't just going to an unbiased non-competing pure fab shop, e.g. TSMC.

Apple already designs their own chips.

Re:And how much is this, really?

[Vapula]

Apple already mentionned leaving samsung to go to other suppliers...

Then, they went on with samsung for their LCD screens on some devices because no other suppliers could give them the same level of quality...

There are other suppliers, but matching Samsung is difficult... Samsung is everywhere... From refrigerators to microwaves, from hard drive to whole computers, from Blue-Ray and DVD players to television sets, from electronic parts to smartphones and tablets... this gives them an huge advantage in scaling costs... which very few competitors may match.

By the way, one of the TFT screen suppliers for Apple, LG, could go down (and stop activities) anytime soon... Who will be able to supply the huge LCD demands from Apple ??? Samsung ? ;-)

I think that Apple's best move is shut up and keep a low...

Re:And how much is this, really?

[hattig]

TSMC doesn't have a 32nm process.

TSMC's 28nm process ramped really slowly, and couldn't cope with the quantities that Apple wanted.

Maybe TSMC's 20nm will work nicely, and not be late, etc, but form doesn't suggest it.

The fact that Apple had to agree to the price rise shows that they have no other options right now.

In addition, who says this isn't merely a 5 year price review by Samsung on their fab contract with Apple, or that another fab would be able to offer significantly more competitive pricing?

Re:And how much is this, really?

[Luckyo]

Sharp, the other major LCD panel manufacturer is in trouble as well. That leaves Samsung and Japan Display as two remaining major display manufacturers. LCD industry suffers from both lack of competition due to four huge companies owning most of the fabs and insane costs of entering into the business. It also suffers from deep specialization leves needed, with only some of the aforementioned companies having necessary tech to manufacture OLED displays. Some are overinvested in IPS or xVA technologies and these factories aren't easy to modify for another technology (which is one of the main with sharp's LCD business at the moment - their choice of technology was suboptimal from current market's view).

Re:And how much is this, really?

[Applekid]

TSMC was an example. Another example is Global Foundries, which does have a mature 32nm process. Point being, there are a lot of companies able to spin wafers today to the technical abilities of Samsung, all over the world.

That said, I'd be very very surprised if those talks haven't already happened with a variety of fabricators.

Re:And how much is this, really?

[tibit]

Apple may need to do what SpaceX did from day 1: everything is done in house.

Re:And how much is this, really?

[viperidaenz]

Apple don't have enough money to build all the factories. They may be the richest company in the world, but its nowhere near enough.

Re:And how much is this, really?

[tibit]

It's plenty enough. For a $3b they could be making all of their displays and glass. For another $10b they can have a state of the art fab.

Sad - even if I dislike Apple

[G3ckoG33k]

Sad - even if I dislike Apple.

Even if Apple doesn't play by the rules, Samsung should.

I hope this is not a 'vendetta' but a sound and fair business decision.

Howeve, I expect Apple to label it 'unfair' whatever Samsung's rationale was.

Apple has lost all credibility a long time ago. Pray Samsung doesn't follow Apple's sullied path.

Re:Sad - even if I dislike Apple

[Anonymous Coward]

Sad - even if I dislike Apple.

Even if Apple doesn't play by the rules, Samsung should.

I hope this is not a 'vendetta' but a sound and fair business decision.

Howeve, I expect Apple to label it 'unfair' whatever Samsung's rationale was.

Apple has lost all credibility a long time ago. Pray Samsung doesn't follow Apple's sullied path.

LOL, implying Samsung has any credibility/dignity left

Re:Sad - even if I dislike Apple

[ccguy]

I hope this is not a 'vendetta' but a sound and fair business decision.

Probably Samsung's CEO thought "there's no way we can keep a long term relationship with these assholes so we should just milk them while we can [removes Tim from speed dial and moves Larry one number up]"

Re:Sad - even if I dislike Apple

[Quakeulf]

Slambdamsung is a big corporate like any big corporate and needs to dominate its position somehow.

Re:Sad - even if I dislike Apple

[CosaNostra Pizza Inc]

kudos to Samsung. You can't really expect Samsung to bend over and take it with the recent $1B Apple win on silly patents, can you?

Re:Sad - even if I dislike Apple

[PortHaven]

Why should Samsung not start to remove it's "favored partner" status discounts?

Seriously, if I were Samsung, I'd say...hey...sorry for the delay. But a worker at the factory that builds your screens destroyed vital equipment over his duress at your lawsuit. We can't produce anything for a year.

Re:Sad - even if I dislike Apple

[MightyYar]

Probably Samsung's CEO thought "there's no way we can keep a long term relationship with these assholes so we should just milk them while we can

I think you are probably correct. I suspect this will lead to more competition for Samsung, though, since Apple will probably actively participate in making the other suppliers more capable. In other words, gouging Apple may bring the inevitable competition a little sooner. Samsung seems like a pretty well-run company, so I can't really armchair quarterback the company's decision.

Re:Sad - even if I dislike Apple

[Anonymous Coward]

The price increase is a reflection on the cost and risk in doing business with Apple. I think they simply remove the volume pricing/favorite customer discount from Apple.

http://www.isuppli.com/Teardowns/News/Pages/Many-iPhone-5-Components-Change-But-Most-Suppliers-Remain-the-Same-Teardown-Reveals.aspx
> iPhone 5: FLASH $76.80, DRAM $9.10

Samsung is also one of the few big memory manufacturer(s) still left in the market. There is still a big chunk of profit there for them should Apple switched SoC vendor, but they have to compete price-wise with the rest of the commodity market.

Re:Sad - even if I dislike Apple

[Anonymous Coward]

Would you care to explain how this is not playing by the rules?

Re:Sad - even if I dislike Apple

[oxdas]

Remember that Samsung makes components for many companies. It also competes with most of those companies with its own products (Apple is the norm and not the exception here). Samsung is able to accomplish this by touting a "wall" dividing their own products and their component businesses. If Samsung breaches this wall for Apple, it could cost them significantly more business. Given that Samsung has yet to take retribution on Apple with its components, even after the $1 billion verdict, I doubt that this is is a "vendetta."

Re:Sad - even if I dislike Apple

[Anonymous Coward]

LOL, there must be two Samsungs.

Samsung is a loathsome company - I buy products that use their components because it's just about impossible to avoid them, but I would never buy a Samsung-branded product.

Re:Sad - even if I dislike Apple

[RightSaidFred99]

Uhh, what rules? Samsung's duty is to get Apple to pay as much as they can for the chips, this is called "business". If anything, they should have asked for more if they have Apple over a barrel. Maybe there are limits in the contract for how much they can hike prices.

Otherwise, they should have gone for 50%, what's Apple going to do about it?

Re:Sad - even if I dislike Apple

[rsborg]

Why should Samsung not start to remove it's "favored partner" status discounts?

Seriously, if I were Samsung, I'd say...hey...sorry for the delay. But a worker at the factory that builds your screens destroyed vital equipment over his duress at your lawsuit. We can't produce anything for a year.

At which point the contractual damages clause kicks in, and Samsung faces some weak quarters. It would be a very lose-lose move and might draw regulatory oversight.

At this point, even simple mistakes have huge consequences.

Re:Sad - even if I dislike Apple

[Aighearach]

LOL, implying Samsung has any credibility/dignity left

Not only is Samsung's credibility intact, they're winning new credibility from playing the good guy against Apple's devious attacks. I see Samsung taking the jury award and adding that much to what Apple pays overall, and then when the award gets thrown out (it faces many and varied challenges and likely there will be a new trial) Samsung keeps the new prices in place. Apple needs to learn that lawsuits happen after negotiations fail, and if you're compelled to go to the other party to negotiate, you should probably stay out of court. Because that becomes part of the negotiation. And Samsung has to factor in getting sued frivolously in all their future prices for Apple.

New business plan

[Anonymous Coward]

1) Sue supplier
2) ???
3) !!!

Re:New business plan

[Anonymous Coward]

4) Fire current legal team for suggesting suing supplier in the first place... forget that, burn current legal team at the stake, make it an AppleTV pay per view event, an example must be made!
5) Hire new legal team, show them the burnt corpses of the previous legal team for proper motivation.
6) Scour the world for the necronomicon and bring Steve Jobs back from the dead to really scare the shit out of the world.
7) Profit!

Re:New business plan

[ArcadeMan]

6b) Put the Steve Jobs back from the dead thing on AppleTV as a pay per view event, profits must be made!

This was expected..

[Sassinak]

Come on.. why would you sue and attempt to bully one of the worlds largest manufacturer chips/screens/etc... and especially those used in your own device. Its akin to me suing my employer while I still work for them.. You know there are going to be repercussions.. Its not a lot (most likely because anything higher than 20% could get them sued (ie: retaliatory business practices).

Sucks that its all going to get pushed down to the consumer. (with a suitable markup).. of course, this could be what Samsung wants.. (gets apple to price themselves out of the market).. because the carriers are not going to absorb that cost.. Apple sure as heck won't take it..

(Glad I'm an Android / Hackintosh guy).

Re:This was expected..

[timeOday]

Sucks that its all going to get pushed down to the consumer. (with a suitable markup)..

That's not true, unless the price increase also hits Apple's competitors. The price for Apple products is in no way directly tied to the cost of producing them. Look at their profit margins.

Re:This was expected..

[Anonymous Coward]

Come on.. why would you sue and attempt to bully one of the worlds largest manufacturer chips/screens/etc... and especially those used in your own device. Its akin to me suing my employer while I still work for them.. You know there are going to be repercussions.

Damn right. If I were running Samsung, the minute I got the notice from Apple's lawyer saying they were suing, I would have put all shipments to Apple on hold indefinitely. Then I would notify Apple that if the lawsuit were not dropped within 30 days, all orders would be permanently canceled and no further orders taken.

"Can't shake the Devil's hand and say you're only kidding!"

Re:This was expected..

[Anonymous Coward]

And if you'd done that, you'd have shortly thereafter received a notice from Apple's lawyers explaining the numerous multi-billion-dollar penalties for breach of contract you were accruing on an hourly basis, and inform you of the suit they just filed over your breach of contract.

And then all your other customers would start looking at their contracts, and saying, "Time for contingency planning, because if Samsung can just decide to pitch a fit and stop all our deliveries, we need a more reliable supplier," which would mean your business would keep shrinking after you lost all those billions in penalties for breach of contract.

In other words, Samsung's refusal to deliver according to the contracts it has signed would spell its own doom, and would certainly see them paying far more in penalties than they'd gain through using their position as a club to beat someone else into submission.

I guess we see why you're posting on Slashdot, instead of running a large, successful company like Apple or Samsung.

Re:This was expected..

[Anonymous Coward]

And if you'd done that, you'd have shortly thereafter received a notice from Apple's lawyers explaining the numerous multi-billion-dollar penalties for breach of contract you were accruing on an hourly basis, and inform you of the suit they just filed over your breach of contract.

And I'd say, "Yep. There's an easy way to end this dispute, though - withdraw your suit." All's fair in love and war... and commerce, which is both.

And then all your other customers would start looking at their contracts, and saying, "Time for contingency planning, because if Samsung can just decide to pitch a fit and stop all our deliveries, we need a more reliable supplier.

Maybe. Or they might be saying "Shit! We'd better not sue Samsung while we're dependent on them."

I guess we see why you're posting on Slashdot, instead of running a large, successful company like Apple or Samsung.

Lol! That's true. I'd make a lousy CEO. :)

so the court costs....

[roc97007]

will be paid on the installment plan.

Re:so the court costs....

[vovin]

Perhaps just a coupon ... 10% off your next purchase of 200M Ax processors?

Mouth that feeds you

[Anonymous Coward]

Samsung had to raise the prices on Apple. How else will Samsung get the money to pay Apple for the lost lawsuit.

This just in

[Anonymous Coward]

Apple phone screens get a price hike of roughly 200% to pay for the 20% increase on their end.

Yes, they should have made it 50%

[Anonymous Coward]

If Samsung knew before hand that they were Apple's only realistically-possible supplier, and if I were Samsung, I would've made it 50%.

Next Samsung move

[Anonymous Coward]

Then, Samsung will buy Qualcomm and significantly increase prices for Apple before contract termination... and this would probably be Game Over for Apple

As much as I hate to say it - that's what they get

[Anonymous Coward]

I fully understand why they're trying to protect their IP (save the debate on the legitimacy of software patents etc), but when they (Apple) don't have their own fab they are somewhat dependent upon Samsung for supplying their parts. Biting that hand when you don't have a secondary supplier is certainly not going to endear you to the guys who make the deals regardless of how big of a customer you are.

All in all, I'm guessing Samsung is going to pay that $1.05B judgement with (snicker) Apples own money. Karma folks, karma.

An old saying

[Anonymous Coward]

You have to wonder if Apple has ever heard the phrase, "Don't bite the hand that feeds you."

I also have to wonder if my dog has ever heard that phrase.

Re:An old saying

[the computer guy nex]

You have to wonder if Apple has ever heard the phrase, "Don't bite the hand that feeds you."

I also have to wonder if my dog has ever heard that phrase.

I wonder if Samsung has ever heard the phrase? Samsung was making a killing manufacturing the components Apple designed. Apple has already found new homes for the majority of the components Samsung used to make for Apple.

Re:An old saying

[Anonymous Coward]

Samsung was making a killing manufacturing the components Apple designed.

No they are not, you made that statement up.

Apple want to have the suppliers balls in their hands, then they can pull a Wal-Mart on them. Give another company a huge contract, then come back year after year after they build up their manufacturing for Apple and demand them to lower costs. Samsung and some of the other "big" players are not so tied to Apple that they fall into that category. Apple can make their own fab for things but they kiss that 100 billion in overseas accounts good bye if it gets to that.

Apple caught the tech companies and suppliers of electonics parts off guard. They were used to a relatively friendly industry and business practices where some of their technology was shared among them for the better of all of them. One company makes displays, another memory, another the drive mechanism, a third on the tuner etc.. Apple does not share and they are learning.

Re:An old saying

[Anonymous Coward]

The amount of money they made manufacturing components was a drop in the bucket. Besides Apple had already made it clear that they were planning to move to other suppliers whenever possible. Can you really blame Samsung for taking what they can while they can?

No, it's not semantics.

[Anonymous Coward]

If the price rises because Samsung want to gouge Apple, this is not nice.

If the price Apple had was preferential, then removing that preferential treatment is right.

The former case is Samsung hitting apple. The latter case is not.

The end of a sale isn't an increase in prices. The end of a tax break is not a tax rise.

But the whining little bastards won't let you consider it anything other than "stealing my money! Waaaah!".

Re:No, it's not semantics.

[MightyYar]

Again, semantics. The end of a tax break is exactly the same as a tax increase. If I was going to get mad about a tax increase, I'm also going to get mad about the end of a tax break. I agree that the two often evoke a different emotional response, but the rational thing to do is treat the two as equivalent - which they are mathematically.

Put another way, if I'm running a business, I don't really care what someone calls a line item on the debit side - if it gets too big, I have to make changes.

Re:No, it's not semantics.

[Nostromo21]

Rubbish. A tax increase is almost always permanent & no one in their right mind would expect otherwise. A tax break, OTOH, is quite often temporary, with a due date or life of (sub)contract, and anyone who expects it to go on forever gets what they deserve when its taken away 'unexpectedly'. QED.

Re:No, it's not semantics.

[MightyYar]

So you are saying that the people in power could not extend a tax break if they wanted to?

I'm sorry, but I don't buy your reasoning. If I pay more taxes from one year to the next, then the people in a position to decide such matters are responsible for a tax increase. Sunset provisions are often used as a cop-out, but the fact is that any previous law can be overridden.

Re:No, it's not semantics.

[Nostromo21]

I was trying to inject some reality into the conversation. I will try to remember where I am next time...

I was talking about removing a tax entirely, which happens very rarely with governments (usually to be replaced with another, renamed/hidden/rebadged tax), vs expecting commercial special price discounts to go on forever unconditionally, which they rarely do. In any case, how did taxation get into the conversation ffs? I thought this was about two giant corporates exchanging monetary fluids...?

Re:No, it's not semantics.

[MightyYar]

Blame the Coward like 4 posts up...

So basically...

[Andy Prough]

...you're talking out your ass?

lol

[TheSkepticalOptimist]

In under two months the tide has turned and there has been so much negative criticism of Apple. Its funny really that the same news sites/reporters/bloggers that raved about Apple just a few months ago are starting to forecast their demise.

I am not saying Apple is going to go bankrupt or anything, but the bubble is bursting as consumers and critics start to realize that Apple is no longer innovating, but instead recycling ideas and spending more time in litigation then innovation. The recent story about HTC and Apple burying their hatchets and instead focusing on innovation seems to suggest Apple is trying to change the perception they have become nothing more then a company that can only compete in the courtrooms rather then on the store shelves.

Of course it was inevitable for Samsung to retaliate against Apple.

However it does make sense for Samsung to increase their costs, even if they are not trying to be petty. Apple has significantly reduced the number of other components previously obtained from Samsung, so Samsung isn't going to volume discount components to a company that is shrinking their business relationship. If you want to buy 80% of your components from one company, you are going to get nice discounts, but if you reduce it to 10% of total components then you are going to be charged more, period.

Tim Cook is a fuck up, period. In just over a year he has crippled Apple and turned them against consumers. It would be very surprising if he doesn't step down sometime in early 2013. 2013 is going to be a very different year for Apple then 2012.

Cutting off your nose to spite your face

[Anonymous Coward]

As a Samsung shareholder, this disturbs me. Samsung seems to think that Apple is a lost customer and needs to milk them for all they can while they can. Other Samsung customers will certainly take note of this action, and it may well reduce their confidence and commitment to Samsung.

It might have been better just to pay the judgment and cozy up to Apple to retain their business. And if that means an apology then do it. The long term benefits from having Apple as a customer far outweigh the satisfaction of retaliation (while turning Apple into a committed enemy), to say nothing of what the message you are sending to the rest of the industry.

The prime objective (and only actual responsibility) for any company is to make money. Making a short term gain for a long term loss is not the way to handle the problem.

Re:Cutting off your nose to spite your face

[Anonymous Coward]

Suck Apple cock and saying yes master ?

Re:Cutting off your nose to spite your face

[SecurityGuy]

Making a short term gain for a long term loss is not the way to handle the problem.

Said no CEO of any publicly traded corporation ever.

Re:Cutting off your nose to spite your face

[M0j0_j0j0]

Let me fix this for you.

The prime objective (and only actual responsibility) for any company is to create value. Making a short term gain for a long term loss is not the way to handle the problem.

Re:Cutting off your nose to spite your face

[RightSaidFred99]

Delusional much? They should have charged far more than a 20% hike, Apple is going to other vendors anyway and they have literally tried to abuse the patent system to make Samsung stop selling phones. Kowtowing to Apple is very short term thinking. If Samsung wants to be a big part of the future of mobile devices they need to go nuclear on Apple.

Re:Cutting off your nose to spite your face

[Anonymous Coward]

Let me fix this for you.

Making a short term gain for a long term loss is not the way to handle the problem.

Said no CEO of any publicly traded corporation ever.

Said no CEO of any American publicly traded corporation ever.

I sell baby powder

[Anonymous Coward]

You insensitive clod!

its not a screw you

[Cyko_01]

This is all about marketing. Sure samsung is screwing apple over, but in doing so they know apple will need to increase prices from 599.99 (or whatever it is) to 601.99 or swallow the price increase. Psychologically 601.99 seems much higher - anyone with marketing experience can tell you that. As a result fewer ppl will buy iphones and get samsung galaxy S3s

Get off my lawn

[Hognoxious]

They don't want to do it, but it's nice to have the ability to do it if they want. Sort of like the Americans/Russians blasting the fuck out of Moscow/Chicago.

Ask gramps about "mutually assured destruction".

vertical integration, dude

[Hognoxious]

If only there was a manufacturer of finished consumer products that was on quite friendly terms with Samsung that'd be just dreamy.

Sigh. If only...

Intel?

[Kyusaku Natsume]

Didn't Intel started to offer foundry services? If Apple makes Intel an offer they can't reject Apple could start to offer their products using chips one process node behind Intel but one process node ahead of their competitors. The increases in battery life and speed could make them like the Microsoft-Intel combo of the 1990's, and still being able to charge a good premium in their products. See thunderbolt for an example of Apple-Intel collaboration.

Re:Intel?

[thammoud]

Seriously doubt that Intel will do this. Intel is by far, the best manufacturer. Why would Intel agree to manufacture chips that will potentially threaten its own x86?

Re:Intel?

[BlackSnake112]

I thought Intel already made CPUs other then X86? I am not so sure Intel would care if one Intel processor was upstaged by another Intel processor.

Re:Intel?

[cheesybagel]

Good luck. Intel seems mostly to be interested in fabbing products which do not compete with their own range such as FPGAs. Not to mention that changing manufacturing process will require a whole new chip design which will probably take 2 years to complete. Apple are better off changing to production to TSMC assuming they can fullfill the demand.

Re:Intel?

[maxwell demon]

which will probably take 2 years to complete.

You mean, it will take the time until the current contract with Samsung ends?

Re:Intel?

[viperidaenz]

They used to make ARM processors for PDA's but sold the business in 2006. It went under the name of XScale. They still have a license to make ARM processors as well.

Re:Intel?

[Dunbal]

Didn't I read here recently that Apple wanted to get away from Intel entirely and make their own chips? Apparently if you stick a lot of money in a room, within a few short months you end up with a great, bug-free, power sipping CPU design. Not sure it works that way outside the reality distortion field though. Yeah good luck with that.

Re:Intel?

[hazydave]

Intel acquired DEC's StrongARM in a law suit settlement with DEC over CPU patents (Intel was using some of the Alpha designs), and that eventually became X-Scale. Which they sold to Marvell some years back. Both Marvell and Intel retain ARM architecture licenses, though Intel's clearly not building any new ARM chips.

Intel's been doing some fab work for a few very small companies. I don't think they're offering anything even close to what Apple needs. Not to mention the old "out of the frying pan, into the fire" problem that would cause -- Intel's hell bent on making x86 compete on price, performance, and power against ARM... and it looks like Microsoft is their biggest booster (they're never getting iOS business, they're still a second fiddle processor on Android, though most apps work -- but on Windows, they have the advantage).

Re:Intel?

[Kyusaku Natsume]

I agree. I think that unless ARM or the chip design team of Apple had shown to Apple's board something like the Core series that Otellini displayed to Steve Jobs the idea of dropping Intel CPUs for the OS X devices is insane.

I would have raised the price higher

[Anonymous Coward]

Apparently this is the price rise:

Current chip price: $17.50/phone
After increase: $21.00/phone
$3.50 increase per phone adds up to about $87M cost increase per quarter (assuming 25M iphone5/ipad4 per quarter)

If I was Sumsung I would have increased the price to $25 a CPU.
F#$#k Apple with their stupid rounded corners patenrts.
Also it looks like Apple want to manufacture their own CPUs so the contract will be terminated anyway - Samsung should really screw Apple as hard as they can.

FIrst LCDs, now CPUs, flash next?

[anth]

Samsung announced they were terminating the LCD supply a few weeks ago:
http://hardware.slashdot.org/story/12/10/22/1757207/samsung-terminates-lcd-contract-with-apple

Now we have CPU price going up.

Some commentators have been predicting this for a while:
http://semiaccurate.com/2012/10/23/apple-vs-samsung-samsung-put-the-boot-in-hard/

Car analogy

[symbolset]

Let's say Ford makes car parts and cars. Chevy decides to use Ford's engine in their car, which turns out to be very popular. Then Chevy gets a patent on their car, and uses it to try to sue Ford for making cars. At this point it's obvious Chevy has gone insane, and it's in Ford's best interest to let them go out of business.

Re:Car analogy

[dna_(c)(tm)(r)]

Sure, but then the US government will bail out Chevy Motors and start all over again and that Korean car maker Ford is really fckd gangnam style.

Note: I would have preferred you switched Ford and Chevy's role - outside of the US they are often Korean cars previuosly known as Daewoo...

Re:Car analogy

[DigiShaman]

Damn it! You just had to remind us of that to-big-to-fail government safety net.

People just forget obvious examples

[SmallFurryCreature]

Steve Jobs vowed to destroy Android, Steve Ballmer did the same with Google and threw chairs. THAT is what corporations are like, they aren't run by a hive mind or a robot, they are run by people who we wouldn't like to be with.

Re:People just forget obvious examples

[Anonymous Coward]

Steve Jobs vowed to destroy Android, Steve Ballmer did the same with Google and threw chairs. THAT is what corporations are like, they aren't run by a hive mind or a robot, they are run by people who we wouldn't like to be with.

Using that same logic, you are like Jeffrey Dahmer and Ted Bundy....combined!

Re:People just forget obvious examples

[Anonymous Coward]

Steve Jobs vowed to destroy Android, Steve Ballmer did the same with Google and threw chairs. THAT is what corporations are like, they aren't run by a hive mind or a robot, they are run by people who we wouldn't like to be with.

But by all accounts Larry Page and Sergey Brin are great guys to be around. How, then, do you explain Google's evilness?

Re:People just forget obvious examples

[Pope]

Apple didn't sue "Android", they sued Samsung for very specific design patents.

Samsung would be foolish to turn away Apple's component business, but I remember Microsoft wanting to stop production of MS Office for Mac, even though it was a profitable product line.

We knew that...

[nospam007]

Karma is a fickle bitch.

Only "units sold" to apple stores.

[Anonymous Coward]

Apple include units sold to apple stores.

Not just ones sold to customers.

And how many Samsung phones do you think the shops are stockpiling and why?

trivial for Apple

[schlachter]

The price increase is somewhat trivial for Apple.

They make $250 - $330 profit on each iPhone sold.
Another $3.50 to Samsung is less than a 1.5% decrease in profit.

Besides, it's a temporary situation. Apple with switch providers as soon as possible.

Re:Last laugh

[RightSaidFred99]

Where's Apple going to go? Nowhere. It's going to take them at least a year to move to another supplier.

And the FTC suit will go nowhere, the FTC doesn't have a leg to stand on. If there are contractual obligations regarding FRAND patents then the courts can deal with that quite well.

Sounds like Apple might need to buy a chip maker.

[zerofoo]

Apple bought PA semi to design their own chips. I'll bet Apple will eventually design an desktop chip and move away from the x86 architecture. They have switched architectures a couple of times before. There is no reason to believe they couldn't do it again.

This could complete their grand strategy of unifying their desktop OS and mobile OS. It would also give them more independence from outside vendors.

I wonder what it would cost to buy AMD lock, stock, and barrel?

-ted

Fixed that for you

[WebCowboy]

Either Apple will start fabricating the chips themselves or someone else will.

Apple already designs their application processors themselves. Thery are even more than a mere ARM licensee as well--they are a founding partner of the original joint venture and I believe they still own a significant amount of that company--they have "priviliged access" to the core IP I'd think.

However Apple is considered a "fabless design house". They rely on Samsung to actually build their deisgn, and to source other fabs is not trivial--there are significant startup and logistics issues in establishing such an agreement, and as Samsung is the sole source for Apple AP chips they are over a barrel. Perhaps Apple needs to build or buy a fab to ensure stable secure supply of components. They've pissed off Samsung, who have done the logical thing and raised the price of their goods to Apple because of increased costs--one of them being the need to pay $1billion in litigation expenses incurred by their mobility division. Seems poetic justice/lgocial business decision to recoup the cost from the customer responsible for that expense doesn't it?

Also, Apple had already sent a clear message to Samsung as various supply contracts expired that they were looking elsewhere even before Samsung adjusted the price upwards, and for more commodity-type parts Samsung has lost that business. Just like with your insurance or your cable company, you get deals when you "bundle". Since Apple is not "bundling" anymore Samsung probably feels justified in increasing the prices on remaining business. This is typical business decision, even without considering the lawsuit/rivalry.

Perhaps Apple can talk to another fab--but I bet the IDMs out there will see how Apple treated Samsung and won't want to go there so they need to work with a foundry-only company like TSMC or GlobalFoundries instead. Perhaps that will isolate them from the risk of suing a supplier directly. Nonetheless if Apple were to get TSMC to build their AP chips, then sued the biggest customers for TSMC chips that might not go too well either.

Beginning of the End For Samsung?

[Anonymous Coward]

Is this the beginning of the end for Samsung?

Pissing off a major customer who will then switch suppliers to a Samsung competitor?

In their race to the bottom, the android manufacturers will all eat each
other's slim profit margins (as happened to PC's). The only winner will
be Google (the new Microsoft) who's aim is to lock in as many customers
as possible and data mine the crap out of them to sell them even more ad-supported
versions of Angry Birds.

Samsung may be the cool kid du-jour, but that may be a fleeting fad, as another manufacturer
takes over (e.g. Nokia might see sense and start an Android line...), or again Apple might steal
another march on them all, eclipsing every mobile manufacturer again as they did with iOS.

The pendulum swings, ya know?

When has Apple increased prices?

[Anonymous Coward]

I don't recall Apple reneging on a contract with it's customers. There is a sale price for their customers, like it or leave it. Samsung on the other hand is increasing prices knowing that they are Apple's only supplier for this particular item.

In other news, prices for raw materials up 25%

[Anonymous Coward]

It's not hard to figure that rising costs of manufacturing lead to rising costs to purchase.
Since Apple's lawsuits are raising expense levels across Samsung's corporate structure, it's no surprise they should pay the majority of the bill.

Don't use current tensing

[rsborg]

The Galaxy S3 (their biggest seller) is selling slightly faster than Apple's biggest seller (the iPhone 4s), in terms of units.

This was Q3 information, when the 4S was the latest iPhone available and the 5 was just around the corner. So you can either a) update with latest information (which does not exist) or b) use past tense, as this is all old information.

overhead

[slew]

Well, now Samsung has got all this new overhead to deal with (lawsuits and stuff, ya know). Last year they had a large customer stop buying memory chips from them, and they also just had a very large customer signal that they would stop buying lcd panels from them and then a customer threatened to take their future SOC fabrication business to TSMC. They have find a way to make more money from their current customers and to pass that increased overhead on to someone... Who better but one of their most unloyal customers?

Except all of Apples ideas are copies anyway.

[Anonymous Coward]

Even Apple's name, and logo, is ripped off. Although, of course, Apple sued other companies for using apple logos that looked much less similar.

Unknown to Apple zealot's, the iPhone was not the first smart phone. And nothing substantial in the iPhone was new, or Apple's invention.

Apple patents are for trivial things like the shape of an icon, or rounded corners - silly, insignificant, things like that.

Re:Except all of Apples ideas are copies anyway.

[Anonymous Coward]

Even Apple's name, and logo, is ripped off.

Here's an idea, maybe there actually is a simpler explanation, maybe Jobs and Wozniak just figured that nobody would ever confuse Apple the computer company with Apple the record label anymore than you would confuse McDonald's fast food restaurant with McDonald the plumbing supplies merchant. In fact trademark dispute cases suits are often tossed out of court if the judge decided commonsensically that there is a very negligible chance that anybody would ever confuse the products of the two companies having the dispute (or these cases used to be kicked out, common sense seems to have been going out of fashion in the courts recently).

Re:Except all of Apples ideas are copies anyway.

[Duckimus Prime]

Yeah its not like Steve Jobs' company would ever go and get involved with the music industry right?

Do lawyers cost a lot?

[Anonymous Coward]

As I understand it: Apple brings in profits of about $14 billion a quarter, and probably spends about $100 million in legal fees during the same quarter.

If Apple's litigation scams help Apple define the market, I would say the lawyer fees are money well spent.

Re:Do lawyers cost a lot?

[BronsCon]

Losing market share while the competitor you are suing eats your lunch is not how you "define the market".

Dear Apple,

[Nyder]

Due to our rising legal fees, we need to increase the price of the products we sell you by 20%.

Thank you for understanding,

Samsung.

FTFY

[Anonymous Coward]

Hiking a single part from approximately $28 to over $33 is going to give their purchasing guys a fit of hysterics fit.

Not knowing the precise definition of conniption, I chose to look it up. It is a fit of hysterics.

Re:FTFY

[MightyYar]

The phrase "conniption fit" may be redundant, but it's not my invention. It's used like "hissy fit".

Re:Last laugh

[Anonymous Coward]

Dear Troll,
Apple is going to TSMC. Samsung will likely maintain residual production of outdated chips for a while, but all new designs will be produced by TSMC and in higher volumes.
And apparently you don't know what FRAND means and that Google paid billions of $$ for Motorola Mobility patents that were already committed to FRAND licensing terms. By not continuing to offer FRAND terms to Apple for those patented technologies, Google is violating anti-trust laws. (It's not about whether Android has a marketshare monopoly--it's about abuse of monopoly control provided by the patent system.) FTC staff have already formally recommended the government file suit. But slashdot abhors that news, just like Fox News abhors news favorable to Obama.

Any reason to suspect that?

[Anonymous Coward]

Or is that suspicion just a way for you to pretend that it's the GP not your or Apple at fault here?

But go ahead: what reason do you have for suspecting that?

Own bed, meet own shit

[aybiss]

If I was Samsung, what I would now do is increase the price a further 20%.

Samsung wins by $400 million

[peterburkimsher]

Apple charged Samsung $1 bn in court. Each A6 processor costs $17.50. A 20% price increase is $3.50. Samsung supply Apple 200 million processors per year. Samsung have a contract to keep supplying Apple until 2014 = 2 years. 3.5 * 200 * 2 = $1.4 bn. And now Samsung has the money to pay off the lawyers. "Don't bite the hand that feeds" Peter

20%? Really?

[Anonymous Coward]

Tsk tsk tsk, Slashdot. Poor editing again. Surely that should read 2000% and not 20%? *evil grin*

Re:Last laugh

[Anonymous Coward]

Dear Stupid Cunt,

The patent system by definition grants a monopoly on the technologies it covers. So filing an anti-trust monopoly based on a patent would be rather moronic.

In conclusion, good luck to you, Johnny Trustbuster Junior, in your stupid cunt's mission of filing anti-trust suits based on monopolies granted by the the patent system. Out here in the real world, we'll wait and see what the courts say about _contract law_ and not try to drag in antitrust where it doesn't belong.

On the top ten list of bad business move.

[madhi19]

1: Suing a part suplier when you got no alternative!

Mainly it's Apple users who lose

[Morgaine]

Samsung is a supplier of really top quality electronic components in the industry, and at the same time offers those components at extremely competitive prices. That made Apple the primary beneficiary of their contractual relationship, because you can be dead certain that Apple didn't let Samsung charge a premium just because their components were going into high margin Apple products. Samsung doesn't have to beg people to buy their components, they sell themselves on price. Samsung PoP memory even went into the extremely cost-sensitive Raspberry Pi, which really underlines Samsung's approach to pricing.

Once Apple replaces Samsung after their myopic patent war, the replacement partner is very unlikely to match Samsung on quality and price together, so if Apple wants high quality they're going to have to pay more and pass that cost on to their customers.

There is only one loser in all of this, Apple users, because it's unlikely that Apple will reduce their margins. And Samsung is almost certainly delighted that once Apple finds a replacement they can stop supplying a partner that chose to become an enemy, and in the interim to force a price hike.

Onlookers

[videocable0922]

I do not know the facts, the crowd about

Bad CEO's

[phorm]

They are, however, also to some extent controlled by shareholders and a board of directors. While a bad CEO can severely damage a company, a savvy board can hopefully limit the damage by sending said CEO packing.

The problem with jobs is that a lot of Apple's brand-image centered around him. Even if the board recognized that he was going a bit AWOL, canning him would have given them a major PR hit among fanbois and probably done really bad things to their stock on a shorter-term basis.

Old adage.

[Anonymous Coward]

Never Invade Samsung in winter.