Leaders in innovation: the battle between Samsung and Apple

IE Focus | By Ricardo Perez, Professor at IE Business School

Only a couple of years ago Apple was the indisputable leader in consumer electronics, but it hasn’t kept up the momentum and now Samsung has it in its sights.

Just two years ago Apple was the undisputed leader in innovation in consumer electronics. Its telephone was unparalleled in features and applications ecosystem. The iPad was sweeping the decks in sales worldwide and it made us learn to work and play in ways that we never imagined, while its competitors tried to copy its products as fast as they could. But the latest products launched by Apple have lost a little of their wow factor. They are merely reinterpretations in different sizes with better features than their previous versions.

Samsung is in total counterphase. After many years of trying to reach Apple’s levels of functionality and ecosystem, it would appear that it is now managing to close the gap. Its telephones are selling at the same price, the company is experimenting with different form factors and they have at least the same technological and software capacities as Apple’s phones. Obviously the war that is being unleashed is not just one of company against company, like Nokia and Motorola years ago, for example. Today these companies are competing in three major fields: technology, ecosystem and integration.

In the field of technology, namely what handsets are able to do, the two firms are very different. Apple has never tried to be the most innovative in this respect. It doesn’t develop its own technology which means it depends on advances made by its suppliers. Its strength in the market is what now keeps it ahead of the rest. Samsung also produces screens and the chips that make telephones work. It invests thousands of millions in research in these areas. It uses these advances for its other electronic divisions, including televisions. That’s where Samsung’s advantage lies.