Free Essays

Samsung and Apple Inc

In Australia, the electronic industry is dominated by oligopoly. The two companies from the electronic industry, Apple Inc. and Samsung, control more than 46% of the market share just from smartphones which gives them dominance that has led to increased difficulties for other firms to enter the market, decreased prices for consumers and higher profits. The competition between these two industries also has caused uproars in employment issues, court cases and copyright controversies.

The similarity of Apple Inc. and Samsung products have led to what became known as the mobile device patent wars due to the extensive litigation in fierce competition in the market. Since these two companies are in the top 15 manufactures, (1st Apple 25.66% and 2nd Samsung 17.47%), the impact of competition between the two companies caused Apple to sue Samsung for one if its component suppliers. Then during autumn 2011, an Australian federal court granted Apple’s request for an injunction against Samsung’s Galaxy Tab. However, the junction Apple sought to block the Tab was denied by the Australian Court after Christmas.

The collusive activities of Apple and Samsung have increased the competition in the electronic industry. Because of their large market share, this control has led to increased difficulties for other companies such as Nokia to enter the market. In reference to the pie graph, the past year proved as the year that Apple and Samsung intensified their rivalry, while former mobile phone leader Nokia further slid down and continued struggling with low percentages. Apple and Samsung have over taken other electronic companies in February 2012 from smartphone sales and during 2010, Apple sold 8.75 million iPhones worldwide. This is an increase of 90% from the same period in 2009. Apple Inc. has now made $5.3 in revenue, or an average of $600 per phone, which is the total of $13.5 billion in revenue. However, Samsung is advancing on Apple through the sales, which causes a decrease in prices of products.

An advantage of the competition between the two firms is the decrease in prices is an advantage to buyers who get to pay less for their products.

However, Apple and Samsung are in need for each other. The components of an iPhone come from a variety of suppliers, mostly cheap labour from China. Samsung also turns out to be a particularly important supplier. It provides some of the phone’s most important components. Together these components account for 26% of the cost of an iPhone. This puts Samsung in an unusual position of supplying a significant proportion of products to its rival. Apple is one of Samsung’s largest customers, and Samsung is one of Apple’s biggest suppliers. This is actually part of Samsung’s business mode, which is acting as a supplier of components for others gives it the scale to produce its own products more cheaply.