Samsung’s profits demonstrate how much Apple could be making in TV market
July 27th, 2012
Daniel Eran Dilger
Headlines are blaring that fact that Samsung sold twice as many smartphones as Apple in the June quarter, but they’re less vocal about the fact that Samsung only earned half as much as Apple. Is it time for Apple to copy Samsung’s HDTV operations? Oh God, no.
Samsung announced $4.5 billion in net profits for the June quarter, while Apple earned $8.8 billion. Of course, the business mix of the two companies don’t perfectly overlap, outside of both making the iPhone and iPad. However, smartphone devices make up the fastest growing and most profitable segments for both.
Samsung also makes appliances, HDTVs, flat panels and has a big semiconductor business, of which Apple is one of its primary customers (if not still the largest). However, Samsung’s chip business isn’t doing all that great, in part because Apple is actively moving its business to new suppliers.
But Samsung does offer some glimpse in how much more money Apple could be making if the Mac maker were to jump in to the HDTV business as a variety of analysts have been predicting for several years now.
Nothing to speak of, that is.
Granted, before Samsung started making components for Apple’s iPhone and iPad (and then began making its own knockoffs of those products in house under the “Galaxy” brand) the firm was making virtually nothing in the smartphone and tablet business, too.
Shortly after the iPhone was announced, Microsoft’s chief executive Steve Ballmer scoffed at while promoting two Windows Phone models that looked like a Blackberry: the Motorola Q and Samsung’s BlackJack. Both are less relevant than RIM itself now.
Samsung’s partnership with Microsoft to make a $1300 Windows powered tablet named the Q1 was also a spectacular failure, in large measure because it copied everything (down to the price point) of the 1994 Newton MessagePad (which hadn’t worked out so well itself, ten years before the Q launched). It was even less successful.
After slavishly copying every detail of Apple’s iPhone and iPad, from retail box to form factor to software and user interface concepts, Samsung is now the most successful of the Android licensees. There’s a one-to-one relationship between success and copying Apple (just ask Microsoft!).
Could Apple now demonstrate to Samsung how to turn its moribund HDTV business around? Probably not, for reasons I’ve stated before. HDTV panels are big, are expected by users to last for many years, and have little differentiation potential apart from a superior user interface, but even that isn’t certain to offer Apple a price premium or a better margin than its entrenched competition.
Apple would have to dredge out an entirely new distribution channel because its current shipping lanes are oriented around small products that are easy to stock, ship and sell to shoppers who walk up to its relatively small retail stores.
If the company is going to make major changes to its product mix, why not at least select a product category that is potentially profitable and has significant untapped demand, as it did when introducing the iPod, iPhone and iPad?