Fri, Feb 22, 2013 - Page 9 News List

Apple and Samsung, frenemies for life

While lawsuits and public spats paint the relationship between the two tech giants as one of all-out rivalry, their close historical ties render the real situation far more complex than that

By Poornima Gupta, Miyoung Kim and Dan Levine  /  Reuters, SAN FRANCISCO and SEOUL

Apple spent about US$10 billion in fiscal 2012 on capital expenditures and it expects to spend a further US$10 billion this year. By contrast, the company spent only US$4.6 billion in fiscal 2011 and US$2.6 billion in fiscal 2010.

However, Apple and Samsung retain very different strategies. Apple has just one smartphone and only four product lines in total, and tries to keep variations to a bare minimum while focusing on the high end of the market.

Samsung, by contrast, has 37 phone products that are tweaked for regional tastes and run the gamut from very cheap to very expensive, according to Mirae Asset Securities. The company also makes chips, TVs, appliances and a host of other products (and its brethren in the Samsung Group sell everything from ships to insurance policies).

Apple devices are hugely popular in the US; Samsung enjoys supremacy in developing countries such as India and China. Apple keeps its core staff lean — it has only 60,000 employees worldwide — and relies on partners for manufacturing and other functions. Samsung Electronics, part of a sprawling chaebol, or conglomerate, that includes about 80 companies employing 369,000 people worldwide, is far more vertically integrated.

It is those differences, combined with the formidable strengths that both companies bring to the market, that may render quiet cooperation a better strategy than all-out war for some time to come.

Brad Silverberg, a former Microsoft executive who was involved in the Mac vs Windows wars, said: “Apple had learnt a lot of lessons from those days.”

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