Comparison between Apple and Samsung
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Comparison between Apple and Samsung
Mention to smartphones, the first two brands flashing into my mind are Apple and Samsung. The top five smartphone vendor market share in 2011 is 17% for Samsung and 18.8% for Apple. In 2012, they become 30.4% and 16.9%. These two leading IT companies do compete in some other products, such as desktops and laptops. However, the fiercest competitive product is smartphone because both of them own their own advantages. We can figure out their emphasis and strategy they use respectively through analyzing their annual report especially the cost of goods sold and gross margin.
From the income statement and balance sheet, the cost of goods sold in 2012 is $118,224,730 million for Samsung and $87,846 million for Apple. The Gross profit percent is 37.02% and 43.9% correspondingly. Obviously, the sales of Samsung exceed Apple substantially but the gross margin percentage of Apple is higher than that of Samsung. These two groups of data reflect Apple Co. can make more profit of every sale unit than Samsung. If we look back forward to last year, the cost of goods sales is $104,700,887 million for Samsung and $64,431 million for Apple and the gross margin percentage is 32.03% and 40.5%. Compared with their income statement between 2011 and 2012, both of Samsung and Apple earn more gross profit in 2012 than in 2011. Moreover, the distance of gross margin percentage from Apple and Samsung narrowed in 2012.
Meanwhile, these information in annual report demonstrates their marketing positioning and price strategy. The sales of smartphones in these two companies both take up about 50%. It’s not hard to discover the total cost of iphone is lower than Samsung smartphones. For example, in 2012, the product cost for Samsung is $118,244,730 million and the period cost is $42,388,520 million. As to Apple, the product cost is $87,846 million and the period cost is $$13,421 million in the same year. The period cost of Apple is extremely low, in sharp contrast with that of Samsung. I believe one of the reason is Apple doesn’t focus on advertisement. Iphone, the only type of phones in Apple, is never marked down unless during the begging after the new generation releases. The strategy of Apple for iphone is to produce a high-end smartphone with a high profit, to focus on technology ecosystem and customers’ experience and to contend for high-end smartphone markets.
A fair proportion of Apple fans are quite loyal and willing to pay the high price to get every generations of iphone because the perfect customer experience keeps them. I think the high-price and low-cost tactic claims why the sales volume of iphone is only 19% but the sales profit can reach up to 68% in the whole market. On the contrary, Samsung puts emphasis on the core production technology. Although Samsung doesn’t have competition advantages with Apple in creative design and software areas, it gains more kinds of customers. Samsung owns its own factory to produce different kinds of phones to satisfy distinct customer groups so that it enlarge the market share from 3.4% in 2009 up to 31% in 2012. Samsung uses comparative lower-price strategy in price. Furthermore, the Galaxy S series smartphone and iphone are running neck-to-neck and their advantages both attract many fans. The diversity of Samsung makes the price changes much more quickly than iphone so it also beats many other phone brands no matter in price or quality.
From what I discussed above, we can obtain much meaningful information and get several conclusions from the company annual report. It can not only improve company internal control and decision maker but also offers us a valuable data to do analysis in various of angles. Just from the data of product costs and period costs, We can summary how a company sets price, what strategy it applies and what the strongest advantage it has.