Will Samsung Replace Apple As Innovator-In-Chief?

Samsung dramatically outsells Apple now, according to IDC's latest numbers, but market leadership isn't merely a matter of market share. While Samsung will almost certainly outsell Apple for years to come, the bigger question is whether the Korean giant is ready to take its mantle as mobile computing's innovation hub. For now, the answer seems to be 'Sort of.'

In the global mobile phone market, Samsung crushes Apple, claiming 23.4% of the market to Apple's 7.8%. But in smartphones, which arguably better demonstrate innovation, Samsung owns 30.3% of the market to Apple's 19.1%.

 

Despite Samsung's superior global market share, it still trails Apple in the U.S., and its flagship Galaxy S still falls short of Apple's iPhone 5 sales. Most of its numerical advantage in emerging markets comes from a "spray-and-pray" approach to product deployment, shipping a number of different form factors and hoping a few will stick. Fortunately for Samsung, its "phablets" like the Galaxy Note 2 seem to be finding an audience, while Apple offers nothing in this tweener market.

A Question Of Innovation

This may be a winning sales strategy, but it doesn't necessarily indicate market leadership through superior innovation. But then, is this any different from Apple? 

According to Booz & Company's 2012 Global Innovation 1000 report, which surveys executives at 700 companies to compile its list of the world's most innovative companies, Apple not only topped the list for the third-consecutive year, but it actually widened the gap between it and second-place finisher, Google, being named as a top innovator by 80% of respondents to Google's 43%.  Samsung, which claimed fourth place, garnered even fewer votes. In this and other measurements of perceived innovation, Apple reigns supreme.

And yet... Apple didn't exactly invent tablets, smartphones, touch screens, voice recognition technology or any of the innovations we generally credit to Steve Jobs and his disciples. Apple simply created demonstrably better products than its competitors. So much so that in 2010 then Samsung telecom chief J.K. Shin, comparing Samsung's user experience to Apple's, said "the difference is truly that of Heaven and Earth."

Let's just say that Shin didn't see Samsung making it to the Pearly Gates.

Is Samsung Getting Better?

Samsung has taken the smartphone and tablet concepts and blended them in its Galaxy Note 2, as mentioned above, which arguably is at least as "innovative" as Apple. But when we talk about innovation, we're really thinking about people or companies that so clearly take control of a market and its very essence that they command respect. Under this definition, Samsung still has a ways to go.

But there are plenty of signs that suggest it knows the way. Remember when Samsung, LG and other Asian brands were considered low-end imitations of innovative Western brands? No, really. People used to think that. But take a walk through any electronics or appliances store and you'll see that it's Samsung, more than any other, that now pushes the innovation envelope. Samsung used to be what you bought when you couldn't afford a "real" brand like Bosch or Sony or GE. Not anymore.

In fact, Samsung arguably has much in common with Apple. Much more so than with Sony, which actually did create a whole new market with its Walkman. Samsung, like Apple, is adept at taking others' concepts and cranking out highly polished products that are superior in form and finish.

The Road Ahead

Looking forward, I suspect we'll see Apple attempt to go back to its role of being a premium, highly profitable BMW-like brand that sets the tone for the industry without actually being used by most of the market. Samsung, like Honda, will be innovative in the sense of building mass-market, high-quality products that stand on their own merits, even if they sometimes take their cue from Apple.

Could Samsung challenge Apple at the high end for the soul of the industry's direction? Yes, it could. As VisionMobile's Developer Economics 2013 report highlights, a big part of Samsung's success, like Apple's, comes down to its "in-house ownership of the most expensive hardware components, ensuring both earliest availability and lowest bill of materials," not to mention the ability to innovate at every level of hardware design. But despite Samsung's ability to challenge Apple at the high-end, as it does now, I suspect that, as it has in every other market in which it competes, feeding the mass market will prove more appealing than dominating the premium-and-comparatively-tiny niche.

Samsung is an innovator. It just doesn't want to have innovation at the expense of market share.