Share Apple bared record-breaking revenue of $18 during the last quarter of last year while Samsung announced company profits declined 37 percent in 2014. Apple also disposed of 74.8 phones against the 73 million of Samsung during the same quarter of that year. This is a very significant change a year earlier when Samsung sold around 83 million smartphones versus the 50.2 million of Apple.
The innovation strategy of Apple transformed consumers thinking regarding post-industrial enterprise. The company’s model for improvement rests on several components. These include the platform and considerable investments in flawless combination of developer and content provider contributions, easy access for users and conflict-free business. The design of the I-phone also re-defined the concept of user interface. Other factors are a competitive internal market as teams struggle against one another on choice projects; effective management of the supply chain; separation of phone parts apparently to exploit the platform and network; radical retail strategies from mobile devices to watches; and, control of customer experiences.
On the other hand, Samsung created its innovation platform based on five elements which enables the company to delineate the concept of hierarchy outside of the traditional approach. These are creating a creative cream of the crop within the company based on innovation training; following and getting around competitors’ patents; steady but easily replicated innovation techniques within the organization; dependence on external know-how for novel ideas; and, multinational methodology.
Research and Development
Apple invested more than $2 billion for research and development during the first quarter of 2015 or $1.1 million daily. This is roughly two percent of net sales. It is a substantial increase over $1.6 billion allocated for the same period of 2014. Apple can invest a maximum of $4 billion over the entire fiscal year. The company espouses the principle that sustained investments in R&D are crucial to its growth outlook and competitiveness in the market. One of the cornerstones of its strategy is to produce user-friendly and beautiful devices that blend seamlessly with a larger system of digital contraptions. Apple is very particular with the choice of new R&D ventures, product design, selection of suppliers, concentrated marketing thrusts, and hiring. The approach shows a pattern of performance associated with such decisions.
Samsung invested $14 billion in 2014 for R&D alone. Part of the focus was on the development of software capabilities to support the company’s potency in hardware. Samsung R&D experts formulate novel concepts through extensive data analysis obtained from research in the field. Analysts and thinkers brainstorm endlessly to come up with the desired innovation solutions. Development teams gather all information and create business strategies based on all the research conducted. During the final phase, the research and development division collaborates with other business units to firm up product models based on requirements of markets and consumers.
Who is Winning and Why?
It seems Apple has been correct all the time as far as smartphone strategies are concerned. For the third consecutive quarter, Samsung reported a 25 percent decline in operating income mainly because of decreasing profits (30%) in its mobile business.
On the contrary, Apple’s iPhone sales went up nine percent even if the company did not move up in terms of operating profit. Nonetheless, its operating income increased 12 percent. Market share of Samsung slipped to 25.2 percent of the entire smartphone market in the second quarter. It plunged from a high of 32.5 percent in 2014 for the same period. Apple’s share also scaled down but only by 11.9 percent. Samsung is losing not only against Apple but in its battle against a lesser-known brand from China called Xiaomi which also uses Android. All these developments make Apple more of a premium mobile phone manufacturer.
The Apple Watch is also emerging as the most influential player in the smartwatch market.
After it was launched in April of last year, the Apple watch went up from zero to around 75 percent while the Samsung shipment of its own version decreased from 700, 000 to 400, 000.
In fact, Apple has sold more watches compared to the aggregate output of Samsung, Sony, Motorola, LG, and Pebble during the whole year of 2014. Rankings in Fortune 500 CompaniesRight now, Apple is number 5 this year in Fortune 500 list of top corporations in the US based on gross revenues. These include $12.5 trillion (revenues). $945 billion (profits) and $17 trillion (market value). It kept the fifth spot for the second straight year after its sixth place ranking in 2013, number 17 in 2012, 35th in 2011, and 56th in 2010. In the world rankings, Apple was number 15 behind Samsung which came out #13 as of March 31, 2015 with $183 billion in revenues compared to Samsung with $195 billion.
Meanwhile, Apple announced the launching of Apple 6s which will be available in retail outlets in the United States. Samsung S6 and Note 4 have been in the world market since early this year.