Apple’s Business Network Conundrum: To Dump Samsung or not

Has Apple learnt the lesson that Dell never learnt?

Apple has grappled with this conundrum for a while now – when, if at all, to dump Samsung? There comes a point in every business network when the erstwhile suppliers become more powerful than the ‘customer’. Dell continued to rely on its suppliers in far east while they were eating his lunch. Look where it landed Dell?

Dell’s supply chain conundrum is not well explained by the market analysts – many of its suppliers are also some of  its biggest competitors. Ten years ago, when Dell was a far bigger company that its much smaller suppliers it Asia, this did not matter much. But they have now copied Dell’s business model to perfection – making its business model redundant. They won market share by under-cuting Dell in the market place, while Dell could not invent a newer business model. No wonder Dell lost the competitve advantage it had created so assidously in the 90s by shrinking the cash-to-cash cycle and building volume.

Apple is concerned that Samsung is doing exactly the same thing to it in the mobile devices market. While it continues to persist with its lawsuit against Samsung, it does not yet desist from continuing to buy critical components from Samsung.

At the same time it also continues to expand its business network – e.g. see its attempt to enrol Intel into its fold.  The news report from BGR explains:

The move could improve the quality of Apple’s mobile chips thanks to Intel’s leading process technology, and an added benefit for Apple would be to finally sever all ties with rivalSamsung (005930), which continues to supply components for various Apple devices.

However, this move may not be an easy one.  Intel itself is re-inventing its own business business model in the post-pc world.  With the shrinking margins in the PC market, and the growing volumes in the mobile world, Intel needs to get into the mobile chip market in a much bigger way than it currently plays in that game. Yet, ‘Intel Inside’ branding strategy may not be popular at Apple. Afterall Apple knows where that left the PC makers in their business networks.

This newsreport from Reuters explains the situation better:

After Intel upped its capital spending budget by $2 billion to $13 billion this year, speculation grew that Apple could ink a deal to use Intel’s leading process technology to make better chips for its iPad and iPhone. Doing so could help Apple end its foundry relationship with Samsung, which has become a fierce competitor with its own smartphones and tablets.

Sunit Rikhi, vice president and general manager of Intel custom foundry, told Reuters last week his group is ready to take on a potential large, unidentified mobile customer, although he declined to discuss Apple specifically.

Intel spokesman Chuck Mulloy said the chipmaker is in constant discussions with Apple, which buys its PC chips, but he would not comment on negotiations about a potential foundry relationship. An Apple spokesman declined to comment.

That is the conundrum then, On one hand is Samsung, a known follower who keeps becoming into a bigger rival. On the other hand is Intel, a hard negotiator where only the paranoid survive.

I talk a lot more about Apple’s business network efficacy in my book 5-STAR BUSINESS NETWORKS – it appears that unless Apple continues to come out with some more designs and gadgets, it will have to now play this game on both fronts.

 

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  • Delaney Chief Supply Chain Global Networks says:

    The Apple Consultants Network is made up of independent, local companies offering IT services and solutions based on Apple products. They’re here to ensure your IT solutions are set up, configured and supported correctly.

    Under Andy Grove’s leadership, Intel became the world’s largest chip maker and one of the most admired companies in the world. In Only the Paranoid Survive, Grove reveals his strategy for measuring the nightmare moment every leader dreads–when massive change occurs and a company must, virtually overnight, adapt or fall by the wayside–in a new way.

  • Isabella says:

    Beautiful explanation about Apple, Samsung, and Intel as well. After reading about all the excerpts I think both are strong competitors in the market but if we go with the business network, apple dump Samsung. I would like to read about it more in the 5-star business network.

  • Aden says:

    As a large provider of computer products and services across both the business and computer sectors, Dell competes most closely with Samsung and Apple. Dell also competes with IBM Corporation in the business hardware and software arenas, as well as with Apple and many other makers of consumer PCs. A year after taking Dell private in 2013 with the help of a $2 billion loan from Microsoft Corporation, company founder Michael Dell announced that Dell had made significant investments over the previous year in business sector markets such as data analytics and cloud services.

  • Willa Lisa says:

    Dell is repositioning toward a greater business computing focus following 10 years of failed consumer devices, which began with an unsuccessful Apple iPod rival called the Dell DJ, released in 2003. In 2010, Dell came out with a barrage of other mobile devices that also failed to catch on with consumers, such as a hinged tablet known as the Inspiron Duo, as well as the Aero, Streak and Venue Pro phones.

  • Michelle says:

    Since going private in 2014, Dell no longer has a legal obligation to display their earnings or financials to the public. However, for 2017, the company released an annual report concerning some key figures. One of the figures included the announcement of $74 billion in combined revenue from Dell’s seven brands. The report also claimed that the company had saved investors $380 million in electricity costs in 2017.

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