Apple shot itself in the foot, tech blogger says

James Allworth, a noted writer for the Harvard Business Review, recently came up with an interesting theory that Apple has propelled the success of its rival and outsourcing firm Samsung Electronics.

In a contribution to tech blog Asymco entitled “The real threat that Samsung poses to Apple,” on Dec. 7, he claims Apple is responsible for Samsung’s present success because it outsourced so much work to the company.

The Harvard Business School graduate, and former Apple employee, added that “it’s impossible not to wonder whether Tim Cook’s announcement yesterday [Dec. 6] on bringing back Apple’s manufacturing to the USA is the beginnings of an attempt to rectify the problem.”

Apple said it would spend more than $100 million next year on building Mac computers on its home turf, shifting a small portion of manufacturing away from China. Apple started moving its manufacturing to Asia to take advantage of lower labor costs in the late 1990s.

Late Apple co-founder Steve Jobs vowed to launch a “thermonuclear war” on rivals that copy its gadgets and said the “biggest target of Apple’s many legal warheads has undoubtedly been Samsung.”

But Allworth raises an interesting point when he asks, rhetorically, “doesn’t it seem strange to you that the target of such a devastating strategy on the legal side, just so happens to be .?.?. one of the most important suppliers for Apple’s new phone?”

The problem that Apple faces, according to the writer, is that the world’s second-largest smartphone producer after Samsung is now facing at least one competitor that has been a beneficiary of the scale of sales Apple has achieved.

“Samsung has clearly demonstrated that it was not satisfied being a low-margin ODM [original design manufacturer] - of doing all the menial work while somebody else made the big bucks. Suing Samsung over Android patents isn’t going to change that,” he wrote. “[But] it doesn’t really matter, because design in the smartphone space has been commoditized.”
He added that Samsung’s threat against Apple has “very little to do with the copying (or not) of Apple’s designs.”

The ongoing patent lawsuits between the two tech kings have simply been “a convenient (if expensive and risky) way to attempt to quash a threat that is of Apple’s own making.”

He proposes that Apple let go of Samsung. “In so much as it is able to trust its suppliers of key components not to become competitors, it can continue to use them. But where it can’t, or where those suppliers have already become competitors, it has only one sensible choice - replace them.”

The first option would be to find another supplier, which could see the same problem repeat itself. The second would be for Apple to build the components itself. “Most companies wouldn’t be in a position to do that. But Apple is almost already there,” he writes.

By Seo Ji-eun [spring@joongang.co.kr]