Differentiating Between Market Structures of Samsung and Apple

Differentiating Market Structures As early as 2012, it was already clear that Apple and Samsung were going to become leaders in the smart phone industry (Epstein, 2012) leaving behind mobile manufacturers Nokia, Sony Ericsson and Blackberry. In fact, as early as the second quarter of 2012, it was already clear that the mobile phone market was going to contract as economic environments become challenging and more consumers anticipate the launch of high-profile smart phones such as the iPhone 5 and Android-powered phones by Samsung. This year, Samsung and Apple still dominate the smart phone market, taking almost half of the market share, combined, with Samsung leading at 21.4% during the first two quarters of 2015 (IDC Staff, 2015). Towards the fourth quarter, however, Apple finally over took Samsung, taking 20.4% of the global smart phone market share following the release of its new iPhone products (Chowdhry, 2015). But Samsung is still close behind garnering 19.9% of the international market for smart phones.  Lenovo took the third place, but its 6.6% market share is way behind the first two leaders. From the data above, one can see easily that the smart phone market is an oligopoly, where there are only a few sellers, with Apple and Samsung as the dominant players. The barriers to entry are great, as new manufacturers have to invest on research and development if they hope to beat Apple and Samsung at their game as both companies have patented their production technologies as well as their hardware designs. At the moment, there are only two smart phone platforms being used, the iOS from Apple, and Android, used by more than 80% of smart phones being sold today. iOS is protected by a patent while Android is open sourced. Hence, what makes Samsung phones unique is not its software, but its hardware. Prevented from copying Apple’s design through a landmark patent infringement case in 2012 (Wagstaff & Kim, 2012), Samsung was forced to innovate its design. High-end Samsung phones have a QHD to rival that of Apple’s High Definition Retina Display; the glass back on the Galaxy series were utilized to add class and elegance to meet the full metal body of the new iPhone releases. But the reason why Samsung is a leader in the smart phone market lies on the fact that it developed devices not just for high-end users, but also for less-affluent users who are wishing to take advantage of new smart phone features. Samsung expanded their product line to include large screen models and entry-level devices. This was possible because Android focused on developing its software while Samsung focused on improving its hardware, allowing both companies to capitalize on their competitive advantage and operate more efficiently. And with Samsung’s experience in producing other electronic gadgets, the company was able to capitalize on improved production technologies, as well as economies of scale. Samsung could create high-end products at lower costs, and so, was able to offer smart phones that could rival iPhone, at lower prices. “Samsung’s richer product line-up and vertically integrated supply structure are among its strongest advantages over Apple’s simpler product range and strength in software” (Wagstaff ...