innovation distinguishes by MutantPuppy on deviantart.com
Last week, John Biggs posted an article over at Tech Crunch entitled, “Why Samsung is the next apple.” Here’s a passage from that piece:
Samsung is number one in TVs for the sixth year in a row, selling approximately two TVs a second in November. While a minority of those TVs have been what Samsung is calling Smart TVs, all new TVs in 2012 will include boxless interactive television, which means a few things. First, it means Google and Apple are in trouble. Two TVs per second definitely beats any performance metrics for Google’s platform and, more important, Samsung has headed off Apple at the living room media pass.
Then consider Samsung’s lead in cellphone sales. While many would argue that Samsung specializes in meh and me-too, 60 million cellphones sold in 2011 can’t be a fluke. This isn’t about Android or iOS or Windows Phone – it’s about Samsung making and selling millions of phones to millions of people. Samsung is mercenary. They’re happy to use anyone’s OS as long as it puts phones into boxes and boxes into shopping bags.
So you have two superlatives: biggest phone manufacturer and biggest TV manufacturer. Add in some tablets, some washing machines, and some acceptable software and you have a real and vibrant ecosystem. The next year will bring plenty of efforts to bring streaming media into the home, but the guy who is already there will win.
The article also goes on to state, “Samsung makes TVs. They make everything – the screen, the PCBs, and the case. Apple will be outsourcing their manufacture and they won’t be able to compete on price, especially when they’re buying panels from Samsung.”
Recently, Bill Waddel posted a couple articles on the Evolving Excellence blog discussing Apple’s culture, its perceived ability to innovate well ahead of the market, and the likelihood that the company could sustain its advantage. The articles, “A Tough Obituary to Write” and “Product vs. Processes” contended that Apple was destined to lose out in the long term, in large part due to less-than-stellar manufacturing practices that would, eventually, undermine any product innovations the company could produce. Bill states:
The Apple business model has been all about innovative products, but mediocre processes and, as a result is a business model that has been a series of spectacular bottle rockets but is not sustainable. It comes a no big surprise to me that Samsung just passed Apple in smart phone sales. Before long someone will surpass them in pad sales – it is inevitable. It is also why I give such short shrift to the economists and politicians who are all in on the innovation band wagon. By and large, they mean innovative products, not innovative processes, so they are urging an unsustainable business and economic model.
Of course, the best of all worlds is to do both – great products and great processes – but if a company is going to focus on one, making a line up of good products through great, innovative processes is the way to go, rather than to keep searching for the great product while paying little attention to processes. It is very much a ‘tortoise and the hare’ deal – slow and steady wins the race every time - even though there are times during the race when the hare might look fantastic.
Those articles at Evolving Excellence, published in October, look like they’re saying much the same thing as the tech crunch article. Apple, for all the articles and books written about its relentless ability to create new products, change paradigms, and establish a cult-like following among those who adore its products – is losing market share. It’s losing out, primarily, to Samsung – and this is particularly interesting since Samsung is Apple’s largest supplier.
As Apple loses ground, it does so at the hands of a savvy competitor. Samsung is supplying components to its competitors, while simultaneously manufacturing products of its own. The products, which have been “meh” and “me too” according to the Tech Crunch article, appear to be breaking beyond that mold since Samsung has achieved product innovation with its Smart TVs, which seem to be setting a new standard.
Is the run that Apple has had on its decline? It could very well be. Although the innovations introduced there have been the stuff of modern-day fables, the sustainability of the business model appears to be suffering in the face of competition that was content to be a second-mover. Straight out of business school textbooks, the second mover has the advantage of watching the first invest heavily in changing the landscape of the market. While Apple has certainly redefined the market over the past decade or two, it seems that its strength is faltering.
I can only imagine what all those authors out there, who have been extolling the virtues of Apple’s culture and its methods for constantly creating innovation, will be saying when the company is far from #1, and a far more savvy and process-oriented competitor dominates the field.
It looks like that’s happening much sooner than anticipated.
