Imitators Can Only Go So Far

Samsung is a big technology behemoth that is fully vertically integrated in hardware, giving it economies of scale and cost to build very price-competitive electronic devices. However, Samsung still lacks the talent of software innovation that Apple has and Nokia has ably demonstrated in its low-cost cellphone dominance. Samsung’s biggest asset is its vertical integration, enabling it to design its chips, manufacture them, build LCDs and its own complete mobile devices in-house, giving it a unique selling proposition of offering lower price points due to lower cost of production. However, Samsung continues to imitate Apple, even the recently launched mobile phone, Galaxy S4, is not a compellingly innovative product.

Much of Samsung’s edge comes from Google which has enabled Samsung and others to unleash competition with Apple by offering a free mobile operating system—Android. Without Android, there is no Samsung high-end mobile phone or tablets. Google benefits by staying on the new mobile platforms to dominate “search”. Samsung, obviously, has benefited more since it has capitalised on Google’s free software offering and leveraged its vertically integrated hardware supply chain to dominate the high-end mobile cellphone and tablet market.

Apple and other Silicon Valley high-technology companies invest very heavily to generate new intellectual property to differentiate it in the hyper-competitive technology markets. It is their right to defend their hard-earned innovations and not be outdone by imitators and free-loaders. Samsung will not always be at the top because no company can be numero UNO globally for too long.

Vinod Dham, V-C and father of the Pentium chip