126 Part 2: Strategic Actions: Strategy Formulation
Strategic Focus
Apple vs. Samsung: Apple Differentiates and Samsung Imperfectly Imitates
phones have copied many of the features of the iPhone 6: high
grade aluminum back and glass screen (Galaxy S5 had a plastic
back) with smooth curved edges, embedded battery, and bet-
ter finger print scanning. Samsung also focused on high quality
apps, even reducing some of their own proprietary apps that
were perceived to be of lower quality. They have also tried toIn recent history Apple has been a product innovator and
dominates the tech industry by creating new markets through
first-mover advantage. This has been done with new concept
products such the iPod, iPhone, and iPad products. Almost
none of its high-tech rivals, such as Samsung, Nokia, BlackBerry,
Google, Dell, and now Lenovo, have created whole new mobile
product categories. However, more recently, Samsung has been
a successful challenger of Apple’s products. In fact, it has been so
successful that Apple took Samsung to court with a lawsuit for
patent infringement. Apple won the lawsuit with a nearly
$1 billion judgment against Samsung. Samsung with its Android
(created by Google) operating system appears to be a quick
follower or imitator of Apple’s differentiation strategy. Although
Samsung’s Galaxy S4 smartphone with a larger screen was a
great success, the Galaxy S5 fell flat and allowed Apple iPhone 6
products to overtake the market share lead from Samsung.
However, Samsung itself has been challenged by low-end
imitators of the smartphone product. One of these competitors
is Xiaomi Inc., a privately owned smartphone producer in Beijing,
China. Xiaomi’s smartphone product has been wildly successful
and popular in China because of its “fan base” network and
online approach for selling low-end smartphones. A competitor
of Xiaomi is Lenovo which recently purchased the Motorola
mobility assets from Google. Xiaomi has been more successful
than Lenovo. Lenovo CEO, Yang Yuanqing, has suggested, “the
online model is disrupting the traditional model ... we definitely
need to address this.” Xiaomi’s fan club approach and online dis-
tribution channel has resulted in lower overhead and a pricing
edge compared to traditional retail vendors. Although Apple
outsold Xiaomi in the fourth quarter of 2014, Xiaomi was not too
far behind. While Apple is seen as a differentiated “luxury prod-
uct,” there is enough quality in the Xiaomi product to challenge
the market share of Apple. However, because the Galaxy S5
product was relatively less well received by consumers, Xiaomi
has surpassed the sales of Samsung. Similarly, Micromax, a low-
end smartphone producer in India, has overtaken Samsung in
India by following Xiaomi’s “copycat” strategy. As such, these
low-end producers have provided relatively high quality prod-
ucts often sold through nontraditional channels (e.g., Xiaomi’s
fan club and online sales channel). They are also rapid second
followers of Apple and have created a dilemma for Samsung.
In response to the very significant success of iPhone 6, as
well as the significant success of low-end phones in large
emerging economies, Samsung has recently introduced its
Galaxy S6 products. Given the competition, Samsung Galaxy S6
©D8nn/Shutterstock.com
The Xiaomi Note smartphone device picture here has help the
company challenge Apple and Samsung products in China
and other emerging markets due to its quality at a low price.
improve on the battery life compared to the iPhone 6
and have added wireless charging as an upgrade. The initial
showing of these products suggests a strong upgrade and a
fast response to the iPhone 6 success. It remains to be seen
whether these products will allow it to regain its preeminence
in the luxury market behind Apple. Samsung obviously has a
lot riding on the success of these new products.
Additionally, it has also has come out with the Samsung Pay
system similar to Apple Pay. However it has upped the ante on
Apple Pay by being compatible with the equipment currently