Apple and Samsung, Going It Alone (Premium)

Apple and Samsung are similar in many ways. But their biggest similarity is perhaps a shared desire to go it alone.

In doing so, these consumer electronics giants hope to further separate themselves from the pack of smaller competitors that are trying to usurp them. That many of these companies are from China is interesting, since that is where most personal technology devices are manufactured today. And that makes me wonder if manufacturing will emerge as a future skill and differentiator for these firms as well.

We’ll see. But for now, the major differentiations are happening at the component level. And that is only going to accelerate. For example, today we discovered that Apple is secretly plotting to create its own displays.

“Apple is designing and producing its own device displays for the first time, using a secret manufacturing facility near its California headquarters to make small numbers of the screens for testing purposes,” a Bloomberg report notes. “The technology giant is making a significant investment in the development of next-generation MicroLED screens, [which] use different light-emitting compounds than the current OLED displays and promise to make future gadgets slimmer, brighter and less power-hungry.”

Today, Apple relies on a handful of companies for its displays, but the biggest is Samsung, which is widely acknowledged as the worldwide leader in display quality.

In late 2017, Apple rightfully crowed about the quality of the display of its iPhone X, which was awarded DisplayMate’s highest-ever rating. Left unsaid by Apple, however, is that the iPhone X’s display was made by Samsung. And when Samsung released its Galaxy S9/S9+ just four months later—surprise!—DisplayMate crowned a new king: The Samsung devices now have the highest-rated display.

That kind of one-upmanship must be unbearable to Apple’s leadership, but it’s just one example of a key weakness that the firm has been addressing over time. Complicated and innovative consumer electronics devices like the iPhone require hundreds of specialized components and come from dozens of different suppliers. And some of the companies that supply these components either compete directly with Apple or at least sell similar or identical components to its competitors. In some rare cases, as with Samsung and Qualcomm, too, those partners/competitors—the “coopetition,” as it were—are as powerful as Apple and could do it real harm.

But Apple has this dirty little secret that dates back to the late 1990’s, when Steve Jobs returned to the company and set it up for a decade and a half of unparalleled and unprecedented growth. Apple will work with partners when it needs to. But it would also work secretly to remove them from the equation if the need was central to Apple’s success.

We saw this in small ways with negligible products like early versions of Mac OS X, where Apple would steal the best ideas of its third-party developer base and integrate that functionality into the platform. And we’ve seen this in major ways in more recent years, when Apple brought its device microprocessor (really, system on a chip) technology in-house by purchasing a small chip-maker and essentially forking ARM for its own needs.

That latter case is interesting on a number of levels. But it’s worth noting that it was Samsung that lost out when Apple started making its own chipsets. Previous to Apple’s A4 chip, the chips in the iPhone were made by, yep, Samsung.

Flash-forward to 2018 and Apple’s increased use of in-house chip designs is accelerating. And it is emerging as a key differentiator between its devices and those made by other firms. You may recall my note about Alan Kay’s “software makes need to make your own hardware” spiel and how it really means making unique hardware components, and not just complete devices. All modern consumer electronics devices rely on components made by many different partners. Apple is pushing to ensure that only it makes the key components in its devices. And that it has multiple partner suppliers for the others. You know, just in case.

Apple isn’t the only big software company making its own hardware. Microsoft is doing it too, and its hardware designs touch both its cloud-based data centers and more traditional consumer electronics devices like Surface.

Google is doing it as well, and like Microsoft, it is innovating both in cloud data centers and with its Pixel and other devices on the client-side.

And then there’s Samsung.

While Samsung is also working on custom chips, it is unique among all of these companies for a number of reasons. Like Apple, it is seeking a go-it-alone strategy in which it will eliminate key partners as needed in order to differentiate from the competition. And this is true with both hardware and software.

I’ve often written and discussed my belief that Samsung’s long-term strategy with devices is to remove as much of Google from the equation as possible. Where Apple already controls its software destiny and thus seeks hardware expertise, Samsung is coming from the opposite side of the equation: It already has hardware expertise. What it needs is its own software.

Yes, you can see a bit of desperation in Samsung’s over-the-top attempts to catch up on the software side: Many of the hardware maker’s applications and services are needlessly duplicative and are often quirky if not just poorly designed. But Samsung’s white whale, Google, is a big one. The desperation is, perhaps, understandable. After all, Google is now trying to compete with its biggest hardware partners, like Microsoft did previously with Surface.

It’s not clear what the end-game for Samsung is, but I have a pat way of explaining when we’ve reached it: In some future Galaxy product announcement, Samsung will announce that it has created its own Maps app and service, replacing Google Maps. And that will be the beginning of what I believe is a phased transition to Tizen, which Samsung is already using across a bewildering array of other device types.

This may seem far-fetched. But with Qualcomm’s ARM-based designs now powerful enough to run Windows 10 on real PCs, the chances that Tizen could replace Android in the same manner—in this case by running Android apps—is not really all that far-fetched when you think about it.

The thing is, Samsung doesn’t actually need to replace Android to achieve its goal of side-lining Google. If you consider Android itself to the least interesting part of Samsung’s mobile devices platforms, and it kind of is, all Samsung really needs to do is provide a continuum for users. They could simply reduce Android to a supporting role. In doing so, it would achieve what Marc Andreessen once predicted for Netscape, that it would reduce Windows, in that case, to “a mundane set of poorly debugged device drivers.”

Whatever the outcome, both Apple and Samsung are uniquely positioned, thanks to their relative sizes and revenue streams, to further distance themselves from the rest of the field. And a big part of how they continue their successful runs will be to rely less on the same partners that the rest of the industry is also using.