Apple regained its place as the world`s second-largest smartphone maker in the third quarter of 2021, and iPhone 13 models are expected to lift it to first place in Q4. One UI Watch and Wear OS powered by Samsung are two of the most interesting features for the user interface and application experience. Still, the press release and unpacked event didn`t reveal many details about what this Google partnership will bring, which sets it apart from last year`s models. We can`t wait to get our hands on one of them and dive deeper into the apps and experiences available. All we know at this point is that Google Maps, Samsung Pay, SmartThings, Adidas Running, Strava and Spotify will be available, with most of them currently available on older Galaxy Watch models. Samsung has been in the wearables market for many years, with the Galaxy Watch 3 and Galaxy Watch Active 2 performing well in 2020 and through 2021. One criticism of the Galaxy Watch has always been its limited third-party apps, despite a fantastic basic experience. The partnership with Google has the potential to make the Galaxy Watch 4 and Galaxy Watch 4 Classic the best smartwatch available and challenge the Apple Watch for wearable dominance. However, declining profit margins in 2014 and 2015 forced an introspective analysis within Samsung`s management team. President Lee Kun-hee has seen his company`s global share of smartphone sales rise from 35 percent in 2013 to 24 percent in early 2015, and his son, Lee Jae-Yong, would like to respond through mergers and acquisitions (M&A) and partnerships. This would be a historic shift in focus that would likely signal a shift from self-funded research and development to outsourced innovation, similar to Apple`s.
Beyond lawsuits, the companies continue to share a close partnership for a long time, with Apple relying on Samsung for components such as the screens of the latest high-end iPhones, as well as fierce rivalry. The Cupertino-based tech giant held a 15.9 percent market share in the third quarter of 2021, which spans the period from July to September, according to analytics firm Trendforce, which evaluated vendors based on smartphone production rather than revenue. On a quarter-over-quarter basis, Apple`s four iPhone 13 and iPhone 13 Pro models drove a 22.6% increase in iPhone production in Q3 2021. The company produced about 51.5 million iPhone models during this period. Surprisingly, these two companies, currently at war for market share, were ideal partners ten years ago, when the two were not competing with each other. An online article published by the Wall Street Journal in July 2013 revealed that Samsung was the main supplier of the microprocessor ”brain” in Apple`s iPods, iPhones and iPads and high-resolution displays. In fact, some of its new iPads still use Samsung displays, according to industry analysts. When Apple partnered with Samsung, it wanted to focus on its core competencies — based on trendy and sleek designs with innovative features — while outsourcing chip design and manufacturing to its partner Samsung.
Samsung was the leading player in this market in a mature technology sector, so Apple had few options and was one of the few companies able to deliver the required bulk quantities of the latest technologies to Apple. The partnership involved information sharing and reliance on Samsung, which reduced Apple`s bargaining power and ability to leverage various technologies, according to some Apple executives who have expressed these concerns in the past. At the same time, Apple executives have been cautious about Samsung`s ambitions to compete with their company, trying to limit the exchange of information with Samsung executives, especially business forecasts. Therefore, Apple has reduced some of its purchases from Samsung by reducing the purchase of iPod displays and flash memory chips for data storage. As for the Apple processor, Samsung remains the only supplier, with $5 billion in purchases in 2012, according to Mark Newman, an analyst at Sanford Bernstein in Hong Kong, quoted online in the Wall Street Journal. It also shows that Samsung has a lot at stake if it loses Apple as a customer, as this will have a negative impact on its profits. Still, Apple has been able to move more of its flash memory chips to Toshiba Corp. and end its reliance on Samsung`s high-resolution displays.
Thus, in 2010, Sharp Corp. screens were used in the iPhone 4. The reason for this decision was Apple`s efforts to differentiate its gadgets through the quality of the screen, which is often perceived by the customer as a standalone ”face.” DisplaySearch analyst Hiroshi Hayase says a screen is the ”face” of a phone, buying screens from your competitor means you`ll be sharing important information. However, other efforts to break free from Samsung failed in 2011 when Apple asked Sharp to provide displays for its third-generation iPad. Moreover, Apple`s efforts to break free from Samsung`s grip on chips have not produced the desired results in negotiations with Taiwan Semiconductor Manufacturing Company (TSMC) on shipments. This time, Apple executives had learned their lesson and avoided entering into a partnership that would lead to dependence on such a powerful supplier. The Wall Street Journal points out that Apple has asked to invest in TSMC or that TSMC is creating a factory space dedicated to Apple chips. Both proposals were rejected by TSMC Chairman Morris Chang because the company saw this type of activity as a threat to its independence and manufacturing flexibility.
Samsung`s strategy was to entangle its main customer Apple in its ”marriage” with competing phones, while managing to strike a deal with Sharp, buy a 3% stake and buy more LCD panels, making it its fifth largest shareholder and customer. This dichotomous buyer-supplier relationship between two giants raises questions about the strength of the relationship that should be forged with large suppliers at a time when marketing orientation is focused on creating long-term value creation networks characterized by long-term relationships with suppliers and distributors. .
