The electronics division of South Korean megaconglomerate Samsung was originally just one of many Android OEMs, or Original Equipment Manufacturers making smartphones and tablets that ran Google’s Android OS. Android was free to everyone, with the catch being that the “crown jewels” — Google’s apps and its app store — would only run on their phones if they let Google have free reign to do as it pleased.
None of them were making very much money. Google was playing them against each other, keeping any of them from distinguishing themselves except through things like the Droid’s vapid ads. After a few years, though, Samsung began to leap ahead of the pack, to the point where it is now basically the only profitable smartphone manufacturer aside from Apple.
Here’s how Samsung did it, and where Apple and Google had a hand in the process.
Samsung controlled the supply chain
Samsung was already winning the war, in a sense, because Apple’s smartphones and tablets used Samsung electronics; Samsung made about 26 percent of the 2010 iPhone 4’s parts by cost, according to iSuppli and the Economist. This manufacturing and supply chain expertise helped Samsung in making its own smartphones and tablets … devices which bore an uncanny resemblance to Apple’s.
Samsung imitated the iPhone and iPad
That’s what the patent lawsuits have found so far, at any rate. Samsung has been forced to pay for damages, but the damage has already been done; Samsung’s gadgets have taken first place in the “like an iPhone, but bigger” market, riding Apple’s success to the stars (or the Galaxies at any rate).
It’s kind of appropriate, because Google’s Android OS itself copies Apple’s iOS so blatantly. As documents submitted during the trial show, the original version of Android, created before the iPhone’s unveiling in 2007, bore a much stronger resemblance to the then-popular BlackBerry OS. After the iPhone came out, Google’s Android plans suddenly changed to have it copy iOS instead.
Samsung outspent Apple on advertising
Samsung didn’t just outspend Apple, in fact … according to analyst Horace Dediu, it outspent Coca-Cola, the company long known for its outsized advertising budget which made people irrationally loyal to its brand of soda. Except that while Coca-Cola’s ads made people associate Coke with polar bears, Samsung’s portrayed iPhone owners as jealous of Galaxy owners, using Apple’s “coolness” to bolster its own in much the same way that Pepsi’s attack ads use Coke’s.
Samsung owns the future?
Samsung still depends on both Apple and Google; Apple for additional component revenue, and Google for the Android OS and essential apps (like the Google Play app store itself).
Samsung is already trying to replace Google’s apps, though, which is why your Samsung Galaxy smartphone has two different apps for everything. Meanwhile, its Tizen project (in partnership with Intel and other companies) is an attempt to create an OS that Samsung can replace Android with altogether.