Apple will Slice Into Samsung’s Profits
We all know how competitive Apple has been on pricing the iPad’s, but it looks like Samsung is finally getting the memo. the South Korean company told Yonhap News Agency that with the new iPad, “Apple has presented new challenges for the South Korean company with a thinner mobile gadget that is priced the same as its predecessor.” This comes as no news to the rest of the world. For some insane reason, the smaller, non tablet optimized Galaxy Tab hit retail shelves at an astonishing $800+ (prices have since dropped). This of course is insanely different from the entry level iPad coming in at $500. One question that should have been asked though, why the heck did it take so long to figure it out?
One of Apple’s biggest strengths in the tech game is their supply chain. This is integral for any business. Basically, the more control you have of outside partners, the better off you will be. Apple commands an impressive share of the market, and lately has seemed to exceed demand. This enables them to capture huge chunks of their manufacturing costs by buying bulk. Apple also works directly with these companies providing insight to machinery and even investing in the factories themselves. There is plenty more to it, but in essence, Apple has things real good to produce their products.
On the flip side, one of the only companies that can compete with Apple in supply chain management is Samsung. Heck, Samsung makes half (not really, but a lot) of the components in the iPhone, iPad and iTouch. In some cases, Samsung is better off than Apple. There clearly is no realization of this through their corporate office though. Samsung’s executive VP, Lee Don-joo was quoted as saying “We will have to improve the parts that are inadequate,” Lee told Yonhap News Agency. “Apple made it very thin,” as well as “The 10-inch (tablet) was to be priced higher than the 7-inch (tablet) but we will have to think that over.”
This is a problem. I’m glad that they are going to look into a new pricing model, but did it really take the launch of the new iPad to realize this? Did they not know that Apple would still stay competitive with their pricing? Did they really think that we would fork over more money than the 7″ Tab cost?
I wrote an earlier article asking if the OEM’s understood the way the game is now. I think with how poorly the XOOM was launched, being unfinished in the software and hardware department, the poor timing from mfr’s on releasing tablets (how many are really out that can compete?), and this new tidbit from Samsung clearly shows how backwards things are. I am not an Apple guy by any means, and am not rooting for fruit dominance. They make excellent products that give users another choice in the market, and that choice is decidedly different that what’s out. But like it or not, they have set the standards for tablets. Everyone else is trying to play catch up to get a piece of the pie. I know Android will eventually do well, but this initial launch of Honeycomb on tablets is a far cry from Apple’s polished network. If Samsung can’t compete, then how do we expect the others to effectively do this?