Why does Samsung help Apple?

hey welcome back and light most you guys realized that I was missing for a week the truth is I was touring in China in the innovative cities like Shenzhen and Guangzhou it was an amazing experience and I'll surely talk about that more in the future but for today I want to focus on Samsung and Apple and how these two seemingly competitors in the smartphone business are in reality partners and stakeholders of each other let's get started some songs feud with Apple has been apparent over the last decade not only are these two companies competitors in the smartphone market they have been suing each other for copyright infringement for years in the $1,000.00 smartphone market iPhones only close competitors are the Samsung galaxys and the Google pixels however Google pixels high competitiveness in the high-end smartphone market is largely undercut by its lack of distributional capability it's 3.9 million sales number pales in comparison to the iPhone sales in 2017 which was over two hundred and sixteen million therefore this effectively makes Samsung the sole competitor of Apple in the high-end smartphone market a research done by counterpoint research points out that over the last year Apple and Samsung consistently occupied over 30% of the United States smartphone market although both are facing strong headwinds from Chinese competitors like Oppo and evil with Opel fine acts and legal Mac's their positions in the United States remain unchallenged and they remain each other's biggest competitor moreover it's also not a secret that both companies hate each other ever since 2011 lawsuits waged between Samsung and Apple seem never-ending culminated this year with Samsung agreeing to pay 539 million u.s. dollars in damages if lawsuits are not a sign of aggression I really don't know what is however despite these hostilities between Apple and Samsung Samsung continues to sell Apple key components that make an iPhone notably over 90% of the world's OLED displays are produced by Samsung and almost all flash memories in the world are made by Samsung so with such strong power over the components that constitute an iPhone why is Samsung not discontinuing its relationship with Apple and cut Apple supply from its source why does Samsung help Apple first of all Samsung and Apple target different market segments Samsung operates on the Android system and Apple uses iOS while the divide of operating systems is not uncross apple it is nevertheless quite profound if you are tied into one ecosystem Apple is famous for locking its consumers into its ecosystem of products once you use a Mac and I fell subscribe to Apple music and invested hundreds of dollars buying apps on App Store it is understanding hard to switch to the Android system thus because of this divide Apple is not that big of a threat to Samsung's smartphone business comparing to the likes of Oppo and Xiaomi in India oneplus has recently taken the second place from Samsung in the high-end market and Xiaomi has emerged first in sales in the low-end market data also shows tremendous substitutability amount Android smartphones this comes to show that benefit of not supplying components to Apple is not as high as we would expect it to be because Apple and Samsung does not have a competitive relationship secondly Samsung makes a lot of money from this relationship with Apple in the most recent report released by Samsung it makes more from selling components than from selling smartphones by a large extent contrary to a consumers know the numbers are quite clear in quarter for 2017 Samsung Electronics made fifteen trillion Korean Won in operating profits among which 11 trillion came from the semiconductor component sales one point four trillion came from o LED and LCD display sales zero point six trillion came from TV sales and finally only two trillion came from smartphone sales it is quite clear how insignificant smartphone sales is comparing to Samsung earnings from selling components flash memories and displace it is conceivable that if Samsung stops selling its displace and memory chips to Apple Apple fails Samsung would do it but in reality if Samsung do that Apple would simply find another supplier of the same component this is why Apple and Google invested billions of dollars in LG to help it become an alternative supplier of OLED displays in the future lastly Samsung also has a committed strategy to lower its per unit cost by producing more than producing a range of related products these techniques are called economies of scales and economies of scope facing competitions from the Chinese with their cheaper labor cost samsung has no alternatives but to find a way to lower its own cost of production by producing more Samsung is able to lower its per unit cost and by producing related products like OLED LCD and semiconductors Samsung is able to utilize the same group of engineers same raw materials and putting those things together in the same factory and hence lowering cost of production in general in the memory chips market Samsung is the absolute leader with over 45 percent market share it has also recently surpassed Intel to become the biggest chip maker in the world therefore precisely because of Apple's huge demand for OLED displays and flash memories Samsung is able to produce its chips and displace at a lower cost thus helping Apple is a win for Apple no doubt but also a win for Samsung as well right after I from town was released last year a famous YouTube channel the nerd writer made a video titled why Apple needs Samsung calling Apple and Samsung's love-hate relationship dysfunctional however I would like to suggest that although their relationship comes strange to most Samsung and Apple are simply acting out the best interest by cooperating with each other yes there are competitors in many ways some might even call them arch enemies suing each other whenever they find an opportunity however it is nevertheless true that the best way forward for both companies are to work together hey thank you so much for watching let me know in the comment down below if you agree with my assessment you can also do the same by following me and Lake creatives on Twitter or Instagram I always answer questions over there so far I also want to thank these people for supporting me on patreon despite me not doing much over there I would encourage you guys to do the same because with more people supporting me on patreon I'll be able to embark on more ambitious projects in the future all right I'm like I'll catch you guys later [Music] [Applause] [Music]

Channel: Curious Elephant

Views: 241,104

Rating: 4.7817702 out of 5

Keywords: curious elephant, Leicreatives, Apple, Apple iPhone X, Xiaomi Mi 8, vivo, oppo, samsung, iphone, mi 8, samsung s9, samsung note 9, Samsung vs. apple, Why Samsung helps Apple, flash chips, dram chip, NAND, semiconductor, LG, OLED display, samsung oled, apple oled, apple chips

Id: yb_n8HDWnBk

Length: 7min 52sec (472 seconds)

Published: Wed Jul 25 2018