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Apple vs. Samsung: Why 'Cool' Isn't Enough to Win
 

This battle won't be won by the hippest brand. As Samsung shows, hustle and hard work matter more against an entrenched competitor.

In a recent series of ads, Samsung poked fun at the Apple "fanboys" that stand in line for hours for the latest version of the iPhone.

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The newest pundit meme in high tech is wondering whether Samsung is out-cooling Apple in consumer electronics, as the South Korean manufacturer takes a market share league. The Wall Street Journal asks, "Has Apple Lost Its Cool to Samsung?" CNBC asks "Who's Cooler Now?" Kudos to Forbes contributor Larissa Faw who at least asked whether the iPhone was no longer cool to teens weeks before the Journal article.

So much for the U.K. judge who, back in October, wrote in a decision on a patent case that Samsung's smartphone design was "not as cool" as the iPhone. He probably thought that he was being cool, working a judgment on the factor into an official court paper. But whether you're one of the tech pundit pack, an Apple fanboy, or a jurist in a powdered ducktail wig, it's clearly easy to lose track of what is important to businesspeople. The important point isn't about which company is cooler. It's about which one is making smarter moves and working hard.

Apple's Lead

For years, Apple held a commanding lead in the smartphone market, and for good reason. The company used existing and development technology, often developed by others, and integrated them into an innovative package that made consumers want to buy the iPhone and then the iPad. Using Apple's legendary secrecy, the public and the press was left to anticipate what would come next.

A quick adjustment of the initial price dropped the cost just enough to make customers willing to shell out for the new devices. Top designers at Apple (and, if the past is any guide, at major consulting firms under contract) refined the look and function. Apple worked on innovation and then rationed it, creating a series of product releases that seemed to build, one to the next, in a progression of must-have phones.

This wasn't cool, like an electronic embodiment of James Dean. It was a deliberate series of efforts over a period of years to create the initial iPhone and then to expand the concept, all the while using patents for legal protection that would act as roadblocks for competitors.

Samsung Catches Up

There were many competitors, including Samsung, the South Korean manufacturing giant that supplied parts for the iPhone, but that also had designs on expanding its mobile phone business, which had started in 1988. It would take hard, smart work to overcome the same from Apple. That has come over the last few years in a number of areas:

  • Design--Samsung had to do more than catch up with Apple. The development of the Galaxy series of devices finally brought Samsung to the point where it could compete. That helps explain why well-heeled Asian consumers are switching allegiance. Samsung sales also show that the same is happening elsewhere.
  • Innovation--No one, not even Apple, can come up with the one product that is all things to all people. But it operates that way, which is actually a weakness. Samsung experimented with many form factors over time, letting sales and consumer reactions guide them. It was a classic approach to product development.
  • Playing consumer psychology--One characteristic of people willing to spend big on luxury items (What else can you call a phone that costs hundreds of dollars when free models are available?) is that they want to have something that most people don't. Exclusivity is critical, and why so many manufacturers get worried about knock-offs. Louis Vuitton doesn't really care that people who don't have large amounts of disposable income buy imitations of its bags. The company worries that a plethora of hoi polloi carrying look-a-likes will be off-putting to the moneyed class.
  • Marketing--Samsung has been absolutely brilliant in its recent marketing, directly targeting Apple with clever jabs that make its competitor look slow and its products behind the times. Focusing on people waiting in lines for a phone also underscores the lack of exclusivity. Plus, Samsung spent massively on marketing and advertising, once it knew what consumers wanted.

See? No magic. No formless and undefinable cool. Just a lot of work doing the basics of business, which is how you really get ahead.

Last updated: Jan 29, 2013

ERIK SHERMAN's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.
@ErikSherman




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