5 Reasons Apple Makes Samsung Look Good
There’s no debating it: Apple (NASDAQ:AAPL) and Samsung (SSNLF.PK) are bitter rivals locked in battle at the forefront of the smartphone war. But, in a war that should simply be about having the best products that are the paragon of design and technology, things are never as simple as they should be, and Apple has been doing some things that make Samsung look good.
Bad blood with suppliers, carriers, accessory makers:
Recently, it became clear just how interdependent Apple and its suppliers are. When Apple shares went up, Suppliers like Foxconn (FXCNY.PK), Largan Precision, TPK Holding, and Radiant saw their stock pop up a little bit as well. When Cirrus Logic (NASDAQ:CRUS) reported a “net inventory reserve of $23.3 million,” $20.7 million of which was suspected to be due to decrease in demand for Apple products, Apple’s stock slide below $400 per share to a 52-week low. Those events made it clear to suppliers how interconnected their fate is with Apple, and some don’t like it. Foxconn is one of the biggest manufacturers of Apple products, but it could soon be cutting its dependence on Apple. Apple is also expected to have a long period without new products as well as tightening margins, and the lack of business and smaller margins are likely to get passed up the supply chain and frustrate Apple suppliers.
Apple may also be trouble for companies on the other end of production as well. Once iPhones are made, they have to be sold be carriers, but it seems Apple has problems in this arena as well. While the world has some 800 mobile carriers, only 240 of those support the iPhone, even though 500 have the technology to do so. Currently, the world’s largest mobile carrier, China Mobile (NYSE:CHL), and Japan’s largest carrier, NTT DoCoMo (NYSE:DCM), don’t carry the iPhone. These carriers and many others may likely see Apple’s terms a bit too demanding and one-sided, as they put a heavy burden on the carriers to subsidizes the expensive phones and guarantee a certain number of device sales. Since September 2011, Apple hasn’t been able to add more than a dozen new carriers to the list of those carrying the iPhone. Meanwhile Samsung is supported by nearly all of the world’s carriers.
Accessory makers are also irked with Apple because its latest devices have changed the way they connect and hurt the value of many accessories. Older iOS devices featured a wide, proprietary 30-pin port, and many accessory makers had to pay for licenses to include the proper plug to connect with these devices. It wasn’t cheap for those manufacturers, and it also gave Apple a chance to keep more control over the accessory makers. But, the newest devices made a sudden and unexpected shift to an entirely new connector port, called Lightning, that would not plug into the devices made with 30-pin plugs unless customers bought adapters. This not only affected accessory makers, but also customers, who quickly saw their stockpiles of iPhone and iPod accessories rendered almost useless if they wanted to continue using the latest and greatest devices. Accessory makers are now turning away from Apple in droves to use more universal wireless connection methods, like Bluetooth, which will work with more than just Apple devices. Meanwhile, Samsung — and even Microsoft’s (NASDAQ:MSFT) Windows Phone-powered smartphones — use more standardized USB ports that are far more compatible and manufacturer-friendly.