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Why Apple and Samsung Still Get Along, Behind the Courtroom Battles
After suing each other for the last few years in various courts around the world, you'd think that if Apple and Samsung were human beings they would have walked away from their rocky relationship a while back. The Wall Street Journal explains (beside the larger fact that they're both huge companies with complex links, rather than a squabbling couple) why it's so hard for Apple to take up with another supplier. Things are starting to look different, though: "Apple's deal this month to start buying chips from TSMC is a milestone. Apple long wanted to build its own processors, and it bought a chip company in 2008 to begin designing the chips itself. But it continued to rely on Samsung to make them. ... TSMC plans to start mass-producing the chips early next year using advanced '20-nanometer' technology, which makes the chips potentially smaller and more energy-efficient."
Now they are just riding it out, both laughing all the way to the bank.
Wow. Ironically Apple could have manufactured themselves under Steve Jobs regime but instead chose through cost saving go elsewhere(Samsung). They famously laughed at the president at the suggestion of bringing Apple Manufacturing to the states, and now are having the unpleasant sunrise of of their top (and only) phone looking mid range and 12-18 months out of date at launch. While Samsung refresh a product range every three months. Now thousands of patents are on various hardware components by various Korean and Chinese companies....with Apple having relatively few design & interface patents, admittedly with a friendly court system looking favourably at them.
Thankfully Jobs does not have to live with the consequences of this...as he died, but in context of going to the bank article...Apple is going to the bank with less profits (less market share, less market cap, less brand value, less cutting edge, less interesting products, less news, less innovation). At least Dell finally got to say I told you so.
"Potentially" makes them smaller and more power efficient. Or rather "does" but the reporter isn't knowledgeable enough to know one way or another. And the real reason for the switch? TSMC will be shipping 20nm, and Samsung wont be for months and months and months, they haven't even announced a switch to a smaller process.
Apple tends towards sticking the highest quality components it can find in its devices, and next year TSMC will provide that while Samsung won't be. Not hard to figure out why the switch is happening.
Sometimes the perception of conflict really works well because it draws media attention to those involved: almost like some free advertising. For the longest time, Coca Cola and Pepsi played up on the public's perception of bitter competition and conflict. In reality, the competition is a good bit friendlier with the executives at each company respecting their counterparts; If you recall, a few years ago someone tried to steal a recipe from Coke and hand it to Pepsi. Pepsi Co ended up reporting this to authorities.
Arrangements like Apple's and Samsung's may sound strange at first but it happens a lot more than one might think. I work for a very large French company that has its own in-house IT services group, yet my subsidiary handles the majority of its IT operations on its own, including using external hosting companies and service providers that directly compete with them. We can get away with it because we execute faster, with better flexibility, higher quality, and for less money.
BTW, controlling the manufacturing isn't the advantage some make it out to be. It's a very low-margin industry, which is why so much of it is done in low-wage places like China. If bringing manufacturing in-house had strategic value then you can be assured that Apple and any other company with a decent mountain of cash would work on acquiring such capabilities. Take a look at Sony- nobody is citing their in-house manufacturing as a key differentiator or advantage.
But to suggest that it's 100% emotions is just silly.
I do believe it is 100% emotions - economics itself is just a branch of psychology.
However, not all emotions are wrong, I just think they aren't an accurate tool, one way or the other, to evaluate the fundamentals of a company.
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