Did Samsung use Apple as an R&D Center?

Now that it has been proven in the courts that Samsung stole key intellectual and patented properties from Apple’s iPhone, I’ve been wondering if this move by them was actually calculated. Go back to the 2007-2008 time frame and we can see from this period that Apple pretty much over night reinvented the smartphone. More importantly, its impact on the marketplace was dramatic. Now imagine if you were a proven feature phone developer and had already been working on your own version of a smarter phone at the time. It would have flabbergasted these companies to see a virtually unknown entity in phones leap frog them with such a stunning product that had, in a very short time, created the defacto standard in smartphones. Even worse, these companies probably realized that their own efforts paled in comparison to what Apple had and were desperate to move quickly to become a competitive player lest Apple own this market by themselves.

We also know from the court documents that Samsung claims to have been working on their own smartphones very close to the time Apple was developing their version. However, I suspect that whatever they were developing was not even close to what Apple had created and had to drop those designs and refocus on creating a product that was equally cool and powerful as Apple had on the market. But doing so meant time and I believe that Samsung decided time was not on their side if they were to be a serious player in smartphones. Also, doing a dedicated R &D project not only took time but bucket loads of money to do so.

I remember seeing the first Samsung Smartphone and thinking at first it was an iPhone. You may remember it since it was a spitting image of Apple’s design. Yes, it had Android as an OS and a few other features, but a lot of us analysts who looked at it were extremely surprised to see that it was pretty much a copy of what Apple had in the iPhone. Now when it comes to R & D, many companies reengineer products and try and put their own IP into it and make it different so it does not come off as a direct copy. However in this case it appears Samsung did not reengineer as much as do a direct copy of it in hopes it could get away with it.

From this move the amount that Samsung will pay in damages to Apple currently is around $850 million. There are other suits still on the table but lets say that in the end Samsung pays Apple $1.1 billion overall in damages. Samsung would have shelled out at least that much in their own R&D costs and been years behind Apple as a competitor. Even worse, they might have never even caught up using their own designs and could have been left in the dust. Given Samsung’s position in feature phones they probably realized that in not doing something close to what Apple had created could lock them out of this multi-billion user market and probably decided it was worth the risk in order to guarantee they would have a place in the future market for smartphones.

The result of copying Apple and getting their own smartphone into the market fast has paid off. Samsung sells 50% of all Android phones and has begun beating Apple in market share in some markets. They now have record profits, much if it coming from their smartphone business. They have become one the top players in smartphones and over time have created their own IP and designs so that they are no longer using any of the copied technology or designs from Apple. To say that Samsung has become one the most powerful CE and smartphone companies in the world would be an understatement.

Now, I don’t think copying and stealing to get a product to market fast is in the play books of any MBA programs but this time what appears to be a calculated risk on Samsung’s part to copy Apple to get their own competitive product to market fast has kind of worked. It only cost them whatever they will pay in final damages to Apple and in the end that amount will probably be less than they would have paid in their own R&D expenses if they had built their own smartphone from scratch and would not have had any guarantee that those early versions would be a success.
Using Apple for R&D is a bad business idea and I don’t recommend trying it, but for Samsung, whether calculated or not, it seems to have worked out in their favor.

Published by

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.

4 thoughts on “Did Samsung use Apple as an R&D Center?”

  1. Hi Tim,

    Saving on R&D is petty cash, isn’t it?

    Just a thought, but I think the worth of this strategy should include the fact that they now dominate Android making considerable profits while the rest of Android OEMs are losing monay as a group. Samsung are also threatening to Apple and Google with plenty of money earned on the bottom line.

    R&D savings: $1B
    Being Num 1 Android: Priceless!

    1. This type of strategy works even better than proposed. As Samsung adds in its own features and developments, its phones look less like Apple’s, and so the settlement is even less than it should be. Four years ago, it looked like blatant copying. Now, it’s just accepted as similar.

      Also, if Apple had failed in their efforts, Samsung would again have had less potential for legal loss.

      Eventually, it will be revealed that this was an effort coordinated with Google’s Eric Schmidt. He is far underestimated. Few understand just how heinous his betrayal of Apple is.

  2. If you think that a court 20 kilometers from apple hq has proven anything against a foreign company you are dead wrong. Never seen such a biased jury. This foreman just wanted to take revenge and did not understand a thing about patents. You are disqualifying yourself if you call the ridiculous jury verdict the ‘truth’.

  3. At most they used them as their “Design Center”. Samsung didn’t copy OS, CPU, display, radios, etc.

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