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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].'"
pwnd
"I'd just like to emphasise that taking a million years isn't a metaphor here..." -Rich Bradshaw
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...)
Also the contract is a long-term one running until 2014.
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.
So it's what, a $4 increase in a BOM that totals out around $200? This is news?
Yeah... Suing a key supplier with no other substitute products is not a good business move. And this response made me laugh. :)
So, everything Apple sells with a Samsung part will now become 20% more expensive?
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....
"It's not that I don't understand what your going through. Its that I just don't care"
1) Sue supplier
2) ???
3) !!!
Either Apple will start developing the chips themselves or someone else will.
Well that worked out well for Apple Maps didn't it? =)
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).
God made the Idiot for practice, and then He made the School Board -- Mark Twain Look for http://Thebar.steelbeachca
Uhhh, apple already develops the chips themselves. Samsung just fabs them.
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]"
will be paid on the installment plan.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
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.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Slambdamsung is a big corporate like any big corporate and needs to dominate its position somehow.
It looks like Samsung passed their costs for the $1Billion judgment along to the consumer, and that consumer is Apple.
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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.
The problems with Apple Maps have been somewhat exaggerated.
Views expressed do not necessarily reflect those of the author.
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...
Are you sure that Apple would not have moved away from Samsung to some competitor anyway?
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.
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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.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
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.
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?
"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.
"Slashdot, where telling the truth is overrated but lying is insightful."
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).
I thought I lived in the US until I opened Apple Maps.
More Twoson than Cupertino
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.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Huh? Samsung doesn't make money off of the GS3? Then why are the most profitable Android device manufacturer?
retrorocket.o not found, launch anyway?
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.
The chip is an Apple design. Samsung is just the foundry.
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.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
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.
I think you are right :)
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
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.
More Twoson than Cupertino
Apple don't build much themselves. They're mostly a Samsung/Foxconn re-branding outfit.
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.
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.
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.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
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.
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.
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Apple may need to do what SpaceX did from day 1: everything is done in house.
A successful API design takes a mixture of software design and pedagogy.
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???
I can mend the break of day, heal a broken heart, and provide temporary relief to nymphomaniacs.
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!".
...you're talking out your ass?
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.
Are you sure your friends are not just happy that you can't find them anymore?
Violence is the last refuge of the incompetent. Polar Scope Align for iOS
Exactly!
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.
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?
Apparently wizard is not a legitimate career path, so I chose programmer instead.
I was thinking the consumer here was the lawyers.
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
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.
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.
I haven't thought of anything clever to put here, but then again most of you haven't either.
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.
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.
There are two types of people in the world: Those who crave closure
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.
Either Apple will start developing the chips themselves or someone else will.
Apple already develops their own chips. However, they do not manufacture them.
Did you jump to that conclusion using directions from Apple Maps?
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."
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).
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.
Property for sale in Nice, France
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.
Said no CEO of any publicly traded corporation ever.
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.
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.
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
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).
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
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.
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.
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.
There are two types of people in the world: Those who crave closure
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".
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
So what you're saying is that they're losing money on every S3 sold, but they're making it up on volume?
Get free satoshi (Bitcoin) and Dogecoins
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...
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Well since they basically told apple to fuck of, I'd say it's probably not from the A6 processor...
A $3.50 increase is telling them to fuck off?
There are two types of people in the world: Those who crave closure
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.
Mexico: 100% conservative's America now!
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/
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.
Help stamp out iliturcy.
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.
The cesspool just got a check and balance.
Yeah, and fairies do the design, right?
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?
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.
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.
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."
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.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
LOL, yup I meant $15.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
So Samsung's phones made less money but sold more phones? Sounds like we have our answer :)
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Karma is a fickle bitch.
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.
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.
My God can beat up your God. Just kidding...don't take offense. I know there's no God.
Wow. Did Apple Maps teleport you upon launch??!!
I've heard it's buggy but that sounds magical!
My God can beat up your God. Just kidding...don't take offense. I know there's no God.
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
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%?
There are two types of people in the world: Those who crave closure
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.
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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?
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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.
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.
Trust The Computer, The Computer is your friend.
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.
The cesspool just got a check and balance.
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.
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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?
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.
There are two types of people in the world: Those who crave closure
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.
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.
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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.
I think we've pushed this "anyone can grow up to be president" thing too far.
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.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
>>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.
http://validator.w3.org/check?uri=http%3A%2F%2Fwww.slashdot.org Errors found while checking this document as HTML5!
The GS3 is made of expensive parts, but guess who makes every single part?
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.
Be seeing you...
The data supplied by TomTom isn't at fault. TomTom's own GPS devices are actually very good.
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.
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.
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).
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
Know anything about capitalizing development costs? Didn't think so.
There are many tricks in bean counter land.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
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.
I can mend the break of day, heal a broken heart, and provide temporary relief to nymphomaniacs.
The phrase "conniption fit" may be redundant, but it's not my invention. It's used like "hissy fit".
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
If I was Samsung, what I would now do is increase the price a further 20%.
It's OK Bender, there's no such thing as 2.
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.
"If a nation expects to be ignorant and free in a state of civilization, it expects what never was and never will be."
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.
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.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Losing market share while the competitor you are suing eats your lunch is not how you "define the market".
APK quotes people (including myself) without context and should not be trusted. Just thought you should know.
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?
APK quotes people (including myself) without context and should not be trusted. Just thought you should know.
LOL, yeah, clearly I was off by an order of magnitude.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
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
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.
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
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.
A successful API design takes a mixture of software design and pedagogy.
Yeah its not like Steve Jobs' company would ever go and get involved with the music industry right?
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.
1: Suing a part suplier when you got no alternative!
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.
"The question of whether machines can think is no more interesting than [] whether submarines can swim" - Dijkstra
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.
Of course news about a fake are Fake News.
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.
Of course news about a fake are Fake News.
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."
Of course news about a fake are Fake News.
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?
Of course news about a fake are Fake News.
I do not know the facts, the crowd about
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.