Big Tech Companies: Innovation and Markets

in LeoFinance2 months ago

It is curious to appreciate the economic performance of the two largest smartphone manufacturing companies worldwide: Apple and Samsung.

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The market share distributed

Although both companies are the two largest smartphone manufacturers worldwide, and share the largest market share, so it is curious to see how well each one does in their own way.

What do I mean by this? Well, to the fact that both Apple and Samsung are not dedicated exclusively to the development of Smartphones, because although it is an important part of what they do; Both Apple and Samsung create technological devices of many types.

Apple, for example, in addition to iPhones, creates computers, tablets, smartwatches and it can be said that it essentially focuses on the development of computer technology devices. Samsung, for its part, has a wide range of devices of all kinds, which it sells on the market; that is, it is not just smartphones, but also smartwatches, tablets, computers, smart TVs, smart refrigerators, among many other devices. Basically, Samsung develops practically any type of appliance that we can imagine.

But I am not saying here that Samsung is better than Apple, nor that Apple is better than Samsung, for me both are excellent companies, that make the best of the best in everything they do. But what I just mentioned, I do it from the point of view that we understand what things bring their income to both companies.

Because if we focus on the smartphone section, it is quite obvious that Samsung currently sells many millions more smartphones than Apple (speaking in annual terms); but even so, Apple obtains a higher profit share in the market from the sale of its iPhone, since it is said that it obtains around 83% of the market share in terms of income.

What is this about? Well, due to many factors, Samsung develops too many smartphone models, of all possible ranges (low, medium and high), and sells them on the market; But Apple focuses on the creation and production of a few iPhone models each year, but at a higher price.

In short, Apple devices target people who are willing to pay more money for a smartphone. Translation: Iphones are, as a general rule, more expensive than Samsungs, but even so, due to a series of diverse factors (such as brand prestige, marketing, tradition, etc.), they continue to generate more income for Apple, than those that Samsung achieves through the sale of its own Smartphones.

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But the most curious thing is...

That although, as I said, Samsung earns less through the sale of its Smartphones, than the income that Apple obtains through the sale of its Iphone; Samsung makes money every time Apple sells iPhones too.

How is this? For a very simple reason, they say that Samsung manufactures the screens that Apple uses in its iPhones, because it is the only manufacturer in the world capable of developing the quantity and quality of screens that Apple requires to manufacture its iPhones. What a paradox, right?

It means that Apple continues to be the leader in terms of profits from sales of Smartphones worldwide, followed by Samsung, but that Samsung also earns from the sale of iPhones by contributing to the development of essential parts for their manufacture.

Relativity in business

Although for the uninformed person, it may seem that Samsung and Apple are two companies that compete in the market and try to eliminate each other, the moderately informed people (like us), we know that although they are two companies that compete with each other in the market, they are not trying to eliminate each other, but constantly innovating to create the best of the best in everything they do, because they both make excellent technological devices, of excellent quality and at a great price.

I have previously put the case that Samsung makes the screens that Apple uses to manufacture its Iphone; but now I will give you another example of Samsung with respect to another important company.

I mean that Samsung currently uses Sony brand lenses for the cameras of its smartphones.

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What does this tell us?

That large companies has it clear, they have the goal of focus on creating great products of the highest quality possible in order to absorb the largest share of profit from the markets. This is great, because it involves the collaboration of all the big companies when they manufacturing their products.

Because if Samsung knows that Apple (or any other company that makes smartphones) is creating devices with certain features, it can try to develop someting similar by itself, but if it can't do it in time to cover the market share with its devices, then it can resort to negotiate with other brands that are already developing the advances that it need to put in your smartphones.

This refers to negotiations with other companies, royalty payments for patents, etc. The fact is that in the business world, not everything is what it seems, it is not, contrary to what most people think, a pitched battle to stay with the market; No. For large companies and technology companies, the most important thing is to constantly innovate, having a growing presence in the market with their technological devices, and providing consumer customers with the best possible devices with an unbeatable quality-price ratio.

This is why the user experience is so important today and why large technology companies strive to constantly improve and increase it. After all, most of us want quality in our technological devices, and we are willing to pay for it; And the big technology companies know this and know that whoever manages to improve the experience of device users through their products will earn more and more revenue.

What do you think about the topic discussed? Please comment.

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