Thursday, August 11, 2011

Apple benefits from Samsung and vice versa amidst suit cases

Back in college, I've learned that "when it's not your company's core competency, outsource it and focus on what you do best." This is indeed what Apple has been doing for years and, undoubtedly, has paved way for their huge success. Today, they have become one of the top companies the Americas value most.

You see, the iPhone's components and parts are manufactured by other companies, so that Apple can put their utmost efforts into designing elegant, easy-to-use combinations of hardware, software and services.

One of Apple's biggest suppliers is Samsung. From the image below, we see that Samsung provides for the iPhone's various memory and processor chips, which are considered very critical parts of any phone.

Image from

Strange as it seems, Samsung is the supplier of Apple and Apple is one of the competitors of Samsung. But as The Economist says, "This is actually part of Samsung's business model: acting as a supplier of components for others gives it the scale to produce its own products more cheaply."

Amidst the suing of Apple to Samsung and the counter-suing of Samsung to Apple, their relationship still continues to bloom. Perhaps this is a testament that the two companies still need each other, as they benefit from one other.

More about the "teardown" graphic above from The Economist here.


This business model is strange but if it's a win-win situation then who cares.  I believe there are other companies that have the same strategy.

I did know Samsung's share in the smartphone market is that big.  Interesting!

A big decline from Nokia noh? Too bad for them.

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