Apple Goes ‘Thermonuclear’ on Samsung

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Apple Goes ‘Thermonuclear’ on Samsung

 user admin 2014-11-11 at 11:02:35 am Views: 210
  • #41429

    Apple Goes ‘Thermonuclear’ on Samsung
    By Rob Witzel

    Steve Jobs was clearly upset.

    As part of Walter Isaacson’s 2011 end-of-life biography, Jobs was sure to let his feelings known about Google’s development of the Android operating system. “I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong. I’m going to destroy Android, because it’s a stolen product,” Jobs said.

    Think he meant it?

    I can close my eyes and imagine orderlies wheeling around a near-death Jobs in his hospital gurney as he used Post-It notes to graphitize the Apple headquarters with this very quote — “I’m willing to go thermonuclear on this.” It’s probably written in Sharpie on the bathroom stalls.

    Now we can see the mushroom cloud.

    Apple didn’t take the fight directly to Google, but to its biggest tributary, Samsung, makers of the only financially successful Android-powered smartphones. After the latest round of financial reporting, it appears Apple is doing so with Colin Powell-like precision. The former general famously declared about the Iraqi army, “First we’re going to cut it off, and then we’re going to kill it.”

    In this case, Apple didn’t out-innovate Samsung, it’s attacking its ability to make money. Even after shipping twice as many devices as Apple, Samsung’s overall mobile division third-quarter profits fell a gasp-inducing 73.9 percent. Since smartphones are the backbone of Samsung’s business, overall profits suffered a 60 percent year-over-year drop. Apple, on the other hand, enjoyed peeling off some of those pesky Post-It notes after reporting an 11.3 percent increase over the year.

    They did this much in the way Ronald Reagan won the Cold War, ironically, by outspending the Soviets on thermonuclear weapons. Apple has its own ballistic missile and it’s called iPhone, which they invest unlimited resources to chisel away the world’s premier smartphone with industry-leading changes.

    Samsung, on the other hand, insists on swinging for the fences by releasing what seems like a new phone for each new idea it has. The company has essentially flooded the zone with dozens of different devices compared with Apple’s one. Just because you spend like the Yankees doesn’t mean you’re going to beat the team with Babe Ruth. Analyst Michael Walkley recently noted his findings that Apple is taking an astonishing 86 percent of the smartphone profits while Samsung claims about 18 percent.

    Forget the lawsuit Apple brought against Samsung last year, that billion-dollar judgment over patent infringements was little more than firing a PR shot over the bow. The shock and awe came with the recent release of the iPhone 6 and 6 Plus, taking the big phone fight to Samsung, the company that invented the “phablet.” Embarrassingly, Apple sold more iPhone 6 preorders in South Korea going head to head with the recently released Galaxy Note 4. It’s not good to lose your home games.

    Make no mistake, Samsung is in trouble. Profits have been trending down all year and not just because they are losing against Apple on the high end, but also because Chinese companies like Xiaomi are producing strong yet cheap phones for the low-end users.

    As Samsung continues to stumble, the storyline goes back to Google. Android is certainly popular and has legions of fans, but is it profitable? These two companies make up 104 percent of total profits because companies like Motorola, LG and HTC are losing money. Google’s interest in Android is more for search engine users than profits, but these trends don’t look good for the viability of the platform.

    You have to figure if Steve Jobs is looking down from that iCloud in the sky, he’s doing a little fist pump as he’s watching his dying wishes playing out.