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The Apple – Samsung psychological gamesmanship

March 15th, 2013 |  Published in Apple, Samsung, The Smartphone Wars

Apple Samsung wrestle

 

Full disclosure: I am long both Apple and Samsung

 

15 March 2013 – With an Apple-like buzz from the media and consumers themselves, Samsung unveiled its new flagship smartphone yesterday, the Galaxy S IV, at the Radio City Music Hall in New York.

Query: I cannot be the only person who thought the idea of a mobile phone launch has now jumped the shark with this latest bizarre spectacle. The show … staged at what must have been vast expense … featured brief appearances from a couple of Samsung executives before the stage was taken over by a cast of actors in a mini-drama which saw the many features of the phone shown off by the compere, his family and his friends. Akin to an under-rehearsed school play. And simply awful jokes.

We had a preview of the phone because Eric De Grasse, our CTO, was in a beta group and had some time to play with it to perform some astounding analysis. We’ll have some thoughts in a subsequent post.  But my two thoughts are:

  • Bound to be a best-seller, with some innovative features, but it won’t transform the mobile landscape; most of these innovations will be of marginal interest to most users
  • Samsung looks determined to make the Android platform and Google vanish from users’ view, hidden under its own branding and services. I wrote about the “threat issue” Google feels from Samsung when I was at the Mobile World Congress (MWC) two weeks ago (click here).

But Samsung, with a combination of huge marketing spend and the genuine excellence of its products, is trying to win the battle to be top dog in the leading mobile operating system.

Samsung and Apple have managed to make huge profits from smartphones in the last two years, while just about all their rivals have struggled to stay in the black. But the markets seem to have decided that from now on, software and services are going to be a better route to profit for both firms than hardware.

 

I somewhat expected Apple to try and divert the focus, at least partially, from the Big Apple announcement in some way, as they had already done sometimes in the past (usually with minor announcements, such small product upgrades). And indeed they tried, but they tried in such a mediocre way.  I think Samsung is winning over Apple, if not in terms of sales, in terms of how the companies are currently being perceived.

One of Steve Jobs’ greatest talents was his ability to market his products as no-one else in the world could do. Apple’s 1984 ad, made in occasion of the first Mac, has gone down in history as one of the most clever ads of all time. “Think Different,” which was made shortly after Jobs returned to Apple in 1997, has been hugely acclaimed. The “Get a Mac” campaign, which ran for three years, cunningly depicting all the advantages the Mac has over a Windows PC, has since become a cultural icon.

Since Tim Cook took the reins, though, we have not seen a single stand-out ad from Apple. The last few ads, albeit cute, are not certainly what you’d call daring: they focus merely on the products, hoping that they speak for themselves, without even mentioning the people who use them.

On the other hand, one of the main reasons Galaxy smartphones are selling like hotcakes is that Samsung is spending billions marketing them. Asymco has estimated that in 2012 Samsung spent more than Apple, Microsoft and Coca-Cola combined in advertising its products. But not only Samsung is spending way more than Apple promoting its handsets (ok, not necessarily a sign of innovation), it is doing so with bold and provocative ads, going brasher and more audacious day in, day out. Just take a look at their recent SuperBowl ad which we have on our “Home” page in the right hand column and you will what I mean.

And I do not agree with a lot of pundits who say it is a generational divide, that older people use iPhones, younger people use Samsungs. The media metrics do not show that at all. What it is, though, is clever marketing.  While Apple played defense with its average ads, Samsung ran a few commercials mocking Apple users, the so called “fanboys.” My favorite, actually, was the one showing a young hipster waiting in line for the iPhone 5, while using a Galaxy S III; when asked by the other people if he was going to ditch the phone for the Apple-branded one, he says that no, he’s just holding the spot for his parents.

It can’t be that Apple doesn’t care about what Samsung is doing; that would be presumptuous and quite blind to do so since the hype surrounding Samsung is totally unprecedented. And my feeling just based on cursory comments at MWC in Barcelona … Apple had it’s usual “quiet” presence at the show … was that some sort of thunder awaits.

I think left unstated by most pundits … and one I have addressed before … is the fragmentation that characterizes the Android ecosystem, one heavily discussed at MWC.

But Apple needs to do something soon, if only to preserve my retirement fund. This new smartphone from its main (and almost lone) rival will hit the market soon, and the momentum has shifted to Samsung.

Gregory P. Bufithis, Esq.

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"The mind that lies fallow but a single day sprouts up follies that are only to be killed by a constant and assiduous culture."
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