Samsung and Apple Competition

Competition is common among companies that produce the same products. Two of the most well known competitors that are in the electronic market are Samsung and Apple. For years, they have been competing to produce the most popular technological devices. Each competing to be on top. Constantly creating individual and innovative ideas. With the need to have the best products, this field induces intense competition that commonly creates legal issues and errors.

Samsung is globally known for its innovative and advanced technology throughout its various industrial departments. In 1938, Samsung was founded by Lee Byung-Chull in South Korea. According to Samsung’s website, it was originally a trading company that sold: dried Korean fish, vegetables, and fruit to Manchuria and Beijing. “In little more than a decade, Samsung – which means ‘three stars’ in Korean – would have its own flour mills and confectionery machines, its own manufacturing and sales operations, and ultimately evolve to become the modern global corporation that still bears the same name today” (Samsung). Samsung eagerly made advances towards manufacturing its own goods and supervising its own sales. This became important in their movement towards becoming a ‘modern global corporation’. Ever since the 1990s, Samsung’s main focus has shifted from selling fish, fruits, and vegetables to increasing its activities and electronics on a global scale. Its mobile phones have become its most important source of income.

Samsung Electronics was one of the world’s largest information technology companies. Before the lawsuit, Samsung Electronics sold its hard disk drive business to Seagate, which made them the world’s largest mobile phone maker by unit (BBC News). Samsung overtook the market leader since 1998, Nokia. According to Fortune magazine, Samsung Electronics is now ranked 13th on the Fortune Global 500 list (Fortune). This list is the annual ranking of worldwide corporation measured by the current year’s revenue. Samsung was making successful decisions and products; it was thriving for countless years. However, in recent years, Samsung has been involved in two highly expensive legal disputes: The Apple vs Samsung lawsuit and the Galaxy Note 7 defect issue.

The costly legal lawsuit between Samsung and Apple went on for several years. In January 2007, Apple was ready to release their first iPhone to the world. Four days before, January 4, 2007, Apple filed four design patents covering the basic shape of the iPhone (Patel). A patent is a grant from the government that gives an inventor the exclusive right to make, use, or sell his or her invention for a period of twenty years (Clarkson, 161). In June of that year, Apple added to its patents. It added color design patents which included different iPhone graphical user edges (Patel).

Apple sued Samsung in the United States District Court for the Northern District of California. On April 15, 2011, Apple sued alleging in a 38-page federal complaint that Samsung infringed on what Apple considers to be its protectable intellectual property. This intellectual property includes: seven utility patents, three design patents, trademarks on several iOS system app icons, and a host of trade dress registrations on the iPhone, iPod touch, iPad, and the packaging that each comes in (Patel). Apple submitted side-by-side image comparisons as evidence to the court. It compared the iPhone 3GS and the i9000 Galaxy S. According to The Verge magazine, this illustrated the suspected similarities in packaging and icons for apps. However, the images were later found to have been tampered with. The images were changed to make the dimensions and features appear more similar. Samsung, then accused Apple of submitting misleading evidence to the court. On April 22, 2011, Samsung counter-sued Apple, filing federal complaints in courts in several countries. Samsung alleged that Apple infringed its patents for ‘mobile-communications technologies’ (Patel).

Samsung, also filed suits against Apple in the United States District Court for the District of Delaware and with the United States International Trade Commission (ITC) in Washington D.C., all in June 2011. A little over a year later, the final American ruling was made on August 24, 2012. Nine American jurors ruled that Samsung must pay Apple $1.05 billion in damages for violating six of its patents (Lowensohn). The jurors also ruled that Apple did not violate any of Samsung’s patents, which they brought forward in this case. After the verdict, Apple pursued to try to ban the sales of eight Samsung phones: Galaxy S 4G, Galaxy S2 AT&T, Galaxy S2 Skyrocket, Galaxy S2 T-Mobile, Galaxy S2 Epic 4G, Galaxy S Showcase, Droid Charge and Galaxy Prevail (Patel). This proposed ban was denied in the United States Court. The extreme desire to be the greatest company provoked Samsung to infringe on Apple’s patents.

Samsung and Apple are always coming out with new devices to try and top the other’s. In 2015, Apple came out with the iPhone 6 and 6s both available in a plus version, causing a terrible year for Samsung’s smartphones. According to Fortune Magazine, the sales of the Galaxy S6, its leading phone, dropped causing profits to for the year to drop 24.6%. To try and make a comeback from this loss, the Galaxy S7 was introduced. It attracted a geekier and more technological audience with a removable memory slot, waterproofing, and fast, wireless charging (Fortune). Although the Galaxy S7 was introduced, Samsung’s other advanced smartphone, the Galaxy Note 7, was found to be extremely defective.

The Galaxy Note 7 became available to the market on August 19, 2016. According to CNET magazine, the first review of the Galaxy Note 7 in August found it to be one of the best phones of the year. It has a large screen, excellent camera, useful S-Pen tools, and a big battery that lasted for hours (Dolcourt). The Galaxy Note 7 was created to compete against Apple’s new iPhone 7. However, not long after the release many of these device’s batteries began to overheat and go on fire. The removable battery has caused the phone to go up in flames in many different cases. Samsung has received ninety-two reports of battery explosions in the United States (Samuelson). Everyone was scared that all Samsung phones will go on fire while traveling: in private cars, in public transportation, or even in airplanes. “The world’s three largest carriers by passenger traffic, American Airlines, Delta Air Lines and United Airlines, say that employees will tell passengers at the gate and on board aircraft to keep the Note 7 switched off until they deplane” (Samuelson). The airlines did not want to chance with this fire-prone phone catching on fire while in the air.

Samsung canceled all of the sales on the Galaxy Note 7 in early September. The U.S. According to the Myanmar Insider, Consumer Product Safety Commission (CPSC) cautioned users to turn off their devices and stop using them. Then, the CPSC issued a voluntary recall of devices sold before September 15 (Lynn). Samsung recalled a total of 2.5 million devices worldwide. Thus far, Samsung has reported that eighty-five percent of all recalled Galaxy Note 7 devices in the US have already been replaced (Spence). This could be the costliest product safety failures in technology history.

Samsung is already facing its first class-action lawsuit over the Galaxy Note 7 from three different customers. A class-action lawsuit is a lawsuit in which a large number of plaintiffs bring the suit as a group (Clarkson). This would be a product liability class-action suit because of the dangerous sale of defective goods by the fault of Samsung. According to CNBC, this suit would represent all Note 7 customers from Nevada, Pennsylvania, and California. This class-action case has been formally named ‘Waudby v. Samsung, 16-cv-07334, U.S. District Court, District of New Jersey (Newark)’. The main complaint of this class-action lawsuit was that customers had to continue to pay monthly plan and device charges after they were instructed to stop the use of their phones and to power them down (CNBC).

After this terrible defect, Samsung must rebuild trust with its consumers. Even though no other Samsung phone has had a harmful defect, many consumers are hesitant to keep putting their money into this company. Samsung smartphone holders are nervous that their phone will also go on fire or even that it will have a different imperfection. Consumers will not purchase from Samsung again unless, they are positive something of this nature will not happen again. People now view the Samsung company as flawed or untrustworthy. This incident has directly affected the other phones in the Galaxy series. Consumers associate this horrific event with the rest of the Galaxy series; deteriorating their trust in the company. Samsung’s mobile chief said that, “We would at any cost find the exact cause (behind the Galaxy Note 7 battery issues) to restore trust of consumers so that they can use Samsung products without any safety concerns” (Sohail). Samsung is determined to do anything and everything it takes to regain trust with its consumers.

Every field of business involves some level of competition. The electronic device section has always included highly intense competition. Apple and Samsung have been battling for years, just like the companies before them. Samsung had two major errors while trying to be number one. A few years ago, Samsung was accused and found guilty of stealing Apple’s intellectual property and patents. More recently, Samsung’s Galaxy Note 7 had a defect where the batteries would go on fire. Samsung was too focused on defeating Apple, that they make sure their products were their own and completely safe for consumers.