What Can You Learn From Them
Most people know Apple and Samsung for their smartphones. Consumers wait expectantly for the next generation of iPhone or Galaxy. However, the two companies use different business strategies to make a profit, and both models can illustrate ways to make more money for entrepreneurs.
Samsung: Taking a Broad View
Even if you prefer the iPhone, you probably have several Samsung products in your home. The South Korean company has three sections in its electronics division: Consumer Electronics, Device Solutions, and Mobile Electronics. This arrangement means that televisions, air conditioners, and computer components all fall under the Samsung umbrella as well as smartphones.
Samsung also recognizes that the world smartphone market is changing. As 5G technology comes online, there will be a growing demand for low-end and mid-range products. The company already holds about 20% of the global phone market compared to 14% for Apple.
The Samsung model shows the benefits of diversification. The company has the flexibility to compete in a quickly changing industry. If one product rollout fails to meet expectations, Samsung can rely on established products for continued profitability.
Apple: Tapping the High-End Market
If asking which company makes more money, Apple is the current winner. The company is worth almost $3 trillion, making it the most valuable business globally. Although Samsung has a larger market share, Apple reliably receives a greater share of annual smartphone profits.
Although Apple has tried to introduce new products, most of its revenue comes from iPhones, MacBooks, and the services that support them. Some economists argue that Apple is shifting from a technology manufacturing company to a technology services provider. They are farming out more steps of the building phase to focus on software and support. In some cases, iPhones contain components manufactured by the Device Solutions division of Samsung.
Apple has reached this level of success by bringing innovative value to consumers with each new product generation. Loyal Apple fans wait with anticipation to hear about the new features of the next iPhone. iPhones have gone from smartphones with a digital camera and mp3 player to multi-functional devices that play games, display media, and track user health.
There is some question as to whether Apple can maintain this level of innovation. The last few generations of iPhones have focused on less dramatic features such as screen size. At the same time, competitors are incorporating versions of once-unique features into lower-end phones.
An entrepreneur might take some lessons from Apple about developing a reputation for excellence. Apple markets its phones as high-end devices, which increases the profit on each unit. People are willing to pay more for an iPhone because they can trust that the product will bring reliable value to their lives. As long as this reputation remains intact, it will be difficult for other companies to draw Apple users away from their iPhones.
Finding the Right Model for Your Business
Your business may not be at the same level as Samsung or Apple, but there are lessons you can take from both companies. At the Productivity Intelligence Institute, I strive to help entrepreneurs discover ways to make more money that build on their strengths and work with their business culture. If you are ready to develop your entrepreneurial skills, I would be thrilled to work with you.