It's about time someone told Apple to take a hike. Bad karma will turn around and bit them in the you know what.
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Samsung to Cease Providing LCD Panels to Apple in 2013
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It's about time someone told Apple to take a hike. Bad karma will turn around and bit them in the you know what.
It's been mentioned multiple times earlier that the reason other tablet makers couldn't really compete price wise against Apple ipads was because other makers couldn't get enough screens sized for tablets because Apple had effectively bought up all the supply.
guess that won't be the case anymore...
And I posted also earlier that Samsung can resell $10 lcd screen to others while Apple can NOT sell a $700 product at all if it doesn't have a $10 part...
I agree. Samsung has to find new buyers, in a growing market with supply constraints.
Apple has to find new suppliers, in a world with limited high quality production capacity.
Between the two, I think Apple takes this one on the chin.
I also wonder if this means anything for Apple TV or the iMac.
Exactly. I wasn't going to post about your first point because I wasn't sure if Apple had effectively locked up Samsung's displays specifically. But I do know that they've (Apple) has "blocked" others from having access to components such as screens.
Pretty much.
Samsung has a business model. Their goal as a business is to earn a certain % of profit on every unit sold.
They probably through their internal budgeting have stated a minimum pricepoint in which they can sell their panels and still maintain their percentage according to budget.
Apple comes along and tells samsung "if you dont sell me that panel at X, we're going elsewhere".
samsung does the math and sees that at that price, they still maintain the percentage of profit needed and agrees.
fast forward a few years later and contract is up for negotiation. Samsung budgets again and sets their pricepoint to maintain profitibility.
Apple comes back, and demands yet a new lower price. Says "we're apple, we buy 15 mil pannels, take what we offer or leave it"
if this new offer doesn't cover the budgeted revenue levels, and is even low enough to possibly remove profit completely, Why would Samsung agree? they're not in business to be a charity house to Apple. Samsung would firmly believe that they can find suitable sales elsewhere for those 15 million, that maintains their budgetted values without having to compromise possible profits and revenues.
this decision likely wasn't personal as everyone wants to believe, but can likely be found to be purely accounting.
I hate accounting
I read in the past other tablet makers (obviously android tablet) had to price their stuff near ipad level despite not having the app/eco support because Apple had bought up most of the production capacity in advance with samsung/etc.
I wonder how it will work out and other tablet makers can price their stuff much lower than ipad, like Amazon's tablet. My guess is enough will sell to hurt Apple's sale of ipad.
It is a change for both. I guess samsung realized they'd rather take a chance in seeking new buyers instead of practically giving their displays to Apple for practically near zero profit...
Could have been a lot of scenarios (similar)
Could have been that Apple came back at the same price point, but Samsung said no because they wanted more profit (and knows Apple makes a huge profit and can afford it)
Could have been that Apple came back with their price and Samsung in the meantime has been feeling out offers from other companies and knows it can sell the same/enough at a higher price AND cut Apple out because it just make fiscal sense.
What I don't think happened - is that Samsung just said "you know what Apple - we don't like you anymore - you're suing us/we're suing you - so screw it - we're not selling our panels to you anymore" - Which is what I think some people here actually think/believe.
Could have been that Apple came back at the same price point, but Samsung said no because they wanted more profit (and knows Apple makes a huge profit and can afford it)
Could have been that Apple came back with their price and Samsung in the meantime has been feeling out offers from other companies and knows it can sell the same/enough at a higher price AND cut Apple out because it just make fiscal sense.
What I don't think happened - is that Samsung just said "you know what Apple - we don't like you anymore - you're suing us/we're suing you - so screw it - we're not selling our panels to you anymore" - Which is what I think some people here actually think/believe.
Pretty much.
Samsung has a business model. Their goal as a business is to earn a certain % of profit on every unit sold.
They probably through their internal budgeting have stated a minimum pricepoint in which they can sell their panels and still maintain their percentage according to budget.
Apple comes along and tells samsung "if you dont sell me that panel at X, we're going elsewhere".
samsung does the math and sees that at that price, they still maintain the percentage of profit needed and agrees.
fast forward a few years later and contract is up for negotiation. Samsung budgets again and sets their pricepoint to maintain profitibility.
Apple comes back, and demands yet a new lower price. Says "we're apple, we buy 15 mil pannels, take what we offer or leave it"
if this new offer doesn't cover the budgeted revenue levels, and is even low enough to possibly remove profit completely, Why would Samsung agree? they're not in business to be a charity house to Apple. Samsung would firmly believe that they can find suitable sales elsewhere for those 15 million, that maintains their budgetted values without having to compromise possible profits and revenues.
this decision likely wasn't personal as everyone wants to believe, but can likely be found to be purely accounting.
I hate accounting
Pretty much.
Samsung has a business model. Their goal as a business is to earn a certain % of profit on every unit sold.
They probably through their internal budgeting have stated a minimum pricepoint in which they can sell their panels and still maintain their percentage according to budget.
Apple comes along and tells samsung "if you dont sell me that panel at X, we're going elsewhere".
samsung does the math and sees that at that price, they still maintain the percentage of profit needed and agrees.
fast forward a few years later and contract is up for negotiation. Samsung budgets again and sets their pricepoint to maintain profitibility.
Apple comes back, and demands yet a new lower price. Says "we're apple, we buy 15 mil pannels, take what we offer or leave it"
if this new offer doesn't cover the budgeted revenue levels, and is even low enough to possibly remove profit completely, Why would Samsung agree? they're not in business to be a charity house to Apple. Samsung would firmly believe that they can find suitable sales elsewhere for those 15 million, that maintains their budgetted values without having to compromise possible profits and revenues.
this decision likely wasn't personal as everyone wants to believe, but can likely be found to be purely accounting.
I hate accounting
NYT had an article about apple constantly squeezing suppliers. A supplier gets apple contract from apple at tight margin. They get in because of the volume and perceived prestige of apple. When they think they got it good, Apple comes back the next year and demands a 10% cut in cost... Pretty sure that's what's happening...
And I tend to agree the decision wasn't personal. It was all based on $ and numbers. Look Jobs declared thermonuclear war against android but the actions don't look like it to me, because doing exactly that would mean costing Apple $$$.
But still even if they make 20% of them, that's still 150 mil displays, which in turn is over 100,000,000 displays. So unless you show me that they made less then 100 mil displays, then I still believe I'm right and either way they are still losing a ton of profit.
They don't realize it because it doesn't. Apple has three other display providers and was obviously planning to give Samsung the boot. Not just on panels either. Ths is just Samsung propaganda acting like it was their idea to lose the very lucrative Apple business, it's laughable for anyone paying attention to what is really happening. Samsung is going to make up for the loss by making Kindle displays? Right. Good luck with that.
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Obviously Apple told Samsung to take a hike not the other way around. Samsung just figured they might as well try to score some points for losing millions of dollars in Apple business before Apple completely dumps them.
Amazon is an interesting example of what I believe is a "loss leader".
Companies often will take a loss on a product if it means increased sales of a higher profit margin product.
I believe Amazon is entertaining such practices with their tablets. They know the hardware margins are too minimal, that they're willing to part with them at virtually zero profit, if not a loss.
The upside is, the larger the installation base, even if they lose a little money (relative little), the more service based features they can sell. In the digital world, Services are huge profit centres versus hardware. the Amazon model will be interesting to note down the line when numbers such as adoption rates come to light.
Let's include some #'s in the discussion.
http://www.geek.com/articles/mobile/samsung-terminates-lcd-contract-with-apple-20121022/
In the first half of 2012 Samsung was Apples top display supplier, shipping over 15 million panels. LG only supplied 12.5 million and Sharp 2.8 million.
...
As for Samsung, it seems they have more than enough demand for panels from elsewhere. Amazon currently uses Samsung displays, Samsungs own devices continue to grow in popularity, and the expected Google 10-inch Manta tablet will also use a super high-resolution Samsung panel.
Granted Apple won't hurt 'that' much because people will continue to buy idevices despite inferior components...
You think Samsung gave their displays to Apple for near zero profit why? Oh you just made that up. I see. Every company in every type of manufacturing tries to get lower prices all the time. It's the way things work. So all of a sudden Samsung got tired of this? No. They are lying. They see that Apple has three other supplier and has reduced Samsung orders with the obvious intention of eliminating them completely.
I don't see Samsung having any issues after this breakup. Their screens have been the most innovative for the past 5 years. They seem to be continuing their innovations in the future. I see this as an apple loss in the end. LG has been notorious for producing sub par displays. So has Sharp. Yes business will rise up for those companies, but at the extent of quality?
Doubling down on ignorance? You should have quit while you were behind.
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Do the math.
huh?
2012 Samsung was Apple’s top display supplier, shipping over 15 million panels. LG only supplied 12.5 million and Sharp 2.8 million.
Apple uses 15 million (samsung) + 12.5 million (LG) + 2.8 million (sharp) displays. Who will supply 15 million displays from 2013?
yeah, do the math please.
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Common practice . Apple is not any different from anyone else. Where they are different is in ordering huge amounts and paying cash while investing in their partners manufacturing.
But Samsung aren't really losing much due to the huge discounts Apple are paying on the displays.
The truth is, Samsung probably won't lose much... they probably already have a new client to buy their superior displays at a higher cost than Apple were willing to pay... meanwhile Apple use inferior displays, and yet again decrease the quality of their products just to spite Samsung... at the cost of customer satisfaction
I can't say for certain with Apple V Samsung in panel profits.
But this isn't an unheard of business practice.
Walmart is renown around the world for this sort of business practice with suppliers.
Walmart pushes suppliers to meet their demands. often suppliers do so because brand recognition and perceived goodwill increases by having your product prominently displayed in a walmart, with high sales volumes, than higher profit margins, in lower volumes at no name stores.
how this could apply to the iphone business.
Back in the day, when the iphone was first released, and the first subsequent releases, there wasn't many other places who had such world renown market penetration as apple. Samsung knows if they want 15 million panels out the door 5 years ago, you bend in to apples demands. Apple's contract helps pay for your costs to increase your production capabilities to where ti needs to be, you gain insane brand recognition as a leader in LCD technology because of apples marketshare and brand recognition.
fast forward 5 years, Apple isn't as readily perceived as the only player. There are hundreds of tech companies who could use these displays. Now apple tries and squeezes a little more (Economies of scale dictates after so much increase ot production, costs of each unit should lower). Samsung turns around and says "we dont need to earn so little profit anymore cause of exclusivity, there are enough places willing to pay more". Samsung refuses the contract and goes elsewhere.
this is speculation of course. the REAL happenings are probably only known to accountants of both firms
Which then makes no sense to mention it since it would then also mean Apple products = Chinese made. Apple = Made in China.
And I don't blame them. Just as someone earlier stated..Don't bite the hand that feeds you.
Just in case you didn't know: Samsung not only uses their own screens (yes - they also build notebooks and tablets) but there are some highly valued companies (e.g. HP) that may be really looking forward to put these screens on Win8 notebooks and Tablets.
You still haven't realized that MS didn't drop the ball with Win8. You are still in denial.
But that's just you. Win8 is great. And Win8 tablets (they don't need to be "The Surface") will be the hot thing this Christmas. So Samsung will sell lots of displays.