My Apple vs. Samsung Conspiracy Theory

The Samsung issues we are seeing has me thinking about something. It’s a conspiracy theory with zero evidence but something that strategically intrigues me. Tim Cook said in a recent interview with Charlie Rose that Apple could have made a bigger iPhone years ago. So the question is, why didn’t they? The writing was on the wall that larger screens were trending upwards. The pundits read this as Apple’s inability to see market demands and hailed Samsung as the rising star who will dominate forever and ever. Apple must have known that all they needed to do to shut everyone up and crush Samsung in the high end Android camp, where it would really hurt them and Google combined, was to release a larger iPhone. Well, my theory is they did know this and they let Samsung and perhaps even Google have their time in the sun intentionally. In the art of war, this tactic is referred to as a feigned retreat.

A feigned retreat is a military tactic whereby an army will pretend to withdraw or that they have been routed in order to lure an enemy into a position of vulnerability. Feigned retreats are one of the more difficult tactics for an army to undertake, and require well-disciplined soldiers. This is because if the enemy presses into it, undisciplined troops will lose coherence and the rout will become genuine.

Samsung knew the large screen iPhone poised the greatest threat. Yet Apple had no sense of urgency. I recall many conversations with Samsung execs who asked with genuine surprise, “What are they waiting for?” Over time, I heard them convince themselves Apple just must not be interested in larger phones. That the one handed operation conviction will trump where the market is going. All the while Apple was sitting back patiently waiting to employ their thermonuclear war that had less to do with the battlefield of the courts and more to do with the battlefield of the market. Knowing that, once they released larger phones, they would gain share in the premium smartphone segment mostly at the expense of Samsung. From every data point I see globally that is exactly what is happening. In fact, I just read a report from Baidu today in China that highlighted data from a survey they did. Over 40% of current high end Android buyers are planning on switching or strongly considering switching to the iPhone 6 Plus. 21% said they would absolutely plan on buying it and 21% said they would strongly consider buying it. All primarily because of the larger screen.

Obviously this is just a theory. I could poke many holes in it with counterpoints. Perhaps I’m giving Apple too much strategic credit. Nonetheless, I thought I would put it out there to spur some fun conversation.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

250 thoughts on “My Apple vs. Samsung Conspiracy Theory”

  1. I think the delay has achieved quite a few things for Android:
    – a few billions in sales
    – a lifeline for some struggling OEMs (which is both a blessing and a curse)
    – gaining the most sophisticated users at the high end and giving them a taste of features not available on iOS (pen, windowing, widgets…)
    – gaining the phone+tablet consolidators at the lower end, and showing them there’s no need to pay $700+ for a good device.

    We’ve got that story about a madman bashing his head with a hammer. “why are you doing that ?” “Because it feels soooo good when I stop !”.

    In the end Apple have come round and redesigned our hands though, so it’s really a gain for everyone.

    1. Sure, I’ve gone into depth on Samsung’s issues and how they are coming from all sides. But my point was more a strategic one for Apple who knew they could hit them where it hurt and let them think they were winning just to make it hurt worse.

      1. In a broad sense, you could call one of Apple’s favorite strategies – moving in on first-movers after they’ve braved the waters and encountered/created problems that Apple can try to better solve – a form of “we’ll give you a head start first (before we go after you and the market you’ve just entered)”.

        For iPhone, my wild guess is it was a immensely complicated mix of factors, some of which might have been:

        – Apple management finding “its own” product vision/”competitive response plan” post-Jobs
        – Apple’s “traditional” 2-year iPhone form factor cadence
        – bringing along its installed base towards bigger iPhones
        – Apple’s peculiar design philosophy (iPhone 6 might not have been mass-production-feasible in present form with available componentry and processes last year)
        – letting competitors help Apple settle on new screen sizes
        – planning damn near perfectly for China Mobile + 4G rollout with the bigger screens Chinese consumers supposedly prefer

        I’m sure an element of antipathy towards Samsung’s IM division plays into this somewhere as well. ūüėČ

  2. I think you’re giving Apple too much strategic credit. I’m going with KISS, so I think it’s more likely that Apple was late primarily because of Apple’s tick-tock production pattern, and Jobs’ strong beliefs that smaller is always better for mobile, and one-handed operation is a necessity.

    But Jobs also said the market determines whether a released product is the right thing or not. So the relative success of larger phones in 2010-2011 did lead Apple to respond with the stretched iPhone 5 in 2012 – stretched but still meeting one-handed operation. Tick-tock ruled out the 4S, so the earliest response was 2012.

    I believe Apple thought iPhone 5 would meet the market demand for larger display. But the additional market success of even larger phones in 2012 spurred Apple to design even larger iPhones in 2013. Jobs’ death and his empowering Cook to do what is right freed Apple from continuing to adhere to Jobs’ beliefs. But, tick-tock ruled out rushing it into the 2013 5S. So that left the 2014 iPhone 6 and 6 Plus, with the Plus attempting to avoid being too small again.

    Some will say but Apple did put out a “new” phone in 2013, the 5C. Why not a larger display 5 Plus instead? I believe 5C was a necessary minor effort (that was begun even before iPhone 5 release) to relieve the foreseen next-year production bottlenecks, reduce the next-year mid-slot iPhone production costs, and with only a minor effort, provide a new option for those who wanted color (like previously on iPod).

    For hardware, Apple doesn’t panic and it doesn’t rush. (Software that is tied to hardware releases is a somewhat different story.) Apple will take all the market share it can get but only if it results from products that meet its quality criteria. Apple is managed for the long-term, and it doesn’t care about leaving money on the table in the short-run, if it means rushing products to market. And as Apple turns its focus to evolving the Apple Watch into a standalone product, I believe Apple will forego the revenue and profits from making more and lower-cost iPhone variants.

  3. I for one think you’re right on the money here. This play is absolutely within Apple’s strategic capabilities. Believing it’s not would require glossing over the deep strategy we see with Apple hardware R&D + component design. Why would we think Apple couldn’t be just as strategic in dealing with its enemies as it is with developing products and the technologies, materials, and processes required?

  4. I don’t know if it was just that. But Apple certainly felt they did not need to move into the >4″ phones until now. Watching Samsung throw everything at the large phones to make them relevant beyond size was probably quite entertaining. Making the iPhone bigger is easy. Making it useable is what took so long.

    I still like the original iPhone form best. It feels best in the hand.

    Joe

  5. I’m sure that you don’t do conspiracy theories lightly, and therefore I’m convinced that you are hearing many many reports that suggest Apple is killing it.

    Also taking Tim Cook’s words to heart, it seems that the competition that Apple intends to crush is not Samsung but rather Google. So I’m more interested in what position Google was lured into and how that will affect their strategy going forward.

    My worry is that Google may have been lured into complacency in the high-end and instead a strong focus on the low-end. Google may have thought that a large screen in itself would be sufficient for the high-end, and that 64-bit or OS-level support for biometric authentication were not priorities. Instead, Google focused hard on making Android work well for low-end phones.

    For proof of complacency in the high-end, I consider the fact that Nexus 6 is still not 64-bit to be a yellow flag. If the performance of Android 5.0 on Nexus 9 is not as good as the iPad Air, then that would be another yellow flag.

    Another thing is how Google is not getting along well with Samsung. Samsung is *the* high-end Android OEM, and Samsung’s health is vital if Google want heavy R&D investment in high-end devices. I’m sure that Google knows that.

    Not sure if it’s a conspiracy, but it sure looks like the way things are playing out.

    1. I’ve brought this up before but yes Google’s position in the high-end and in the US is being threatened. Their recent revenue issues are just the tip of the iceberg. Google (Android) is rapidly losing the majority share of the US market which makes them vulnerable, they get nothing to China, their growth has stalled, losing the high-end and only mid-low end markets remain growth possibilities for them.

      As I pointed out earlier in the week, watch India. Google can not afford to lose India and right now there is no guarantee their services are the default. India could go the way of AOSP and I believe Xiaomi will drive that trend there once they are solidified. They make too much money from their app stores to give that to Google. Google will have to be cut throat in India. Will be a fascinating to market to watch.

      1. Yes.

        About 18 months ago, when FireFox OS was making headlines, I wondered whether Android should focus on the high-end or the low-end. I concluded at the time that Firefox OS (and later Windows Phone) might threaten Android at the low-end. Therefore Google should focus on making the newest versions run on low-end machines (previously, low-end devices often ran Android 2.3).

        This was what Google actually did with KitKat. They made it work well on low-end devices. That didn’t mean that my prescription was correct though.

        Reading your conspiracy theory, I realized that Google may have thought that there wasn’t much left to do on the high-end, and that also encouraged them to focus on the low-end. Apple lured them to defocus on the high-end.

        Losing the high-end might be much more devastating from a financial standpoint, compared to any gains they may make in India or Brazil. I think that is the concern. Google might have been lured to bark up the wrong tree.

      2. Aren’t most of the u.s. people who immigrated from high-end android phones are still using android ? what does it matter to google if they buy cheaper phones ?

  6. From the way I see it the thing that’s pushing things up are down is China. First I am not sure Apple got the sales it wanted in China so that’s a good reason for a big screen. Second Samsung and maybe Google should have been worrying when Apple got a carrier deal in China and they did make efforts. Samsung tried to clean up the look of their software and got rid of the nasty plastic and replaced it with leather looking plastic and on the Google side they made kitkat which should have helped Samsung because there phones are known for bloatware. Lastly Google has been working on faster updates which doesn’t help the look and feel for the consumer because Samsung especially throws Googles user interface in the trash. Android Lollipop should help depending on how hard they skin it and after that all that’s left is smartphone cameras.

  7. @benbajarin:disqus was loosing almost Half of their stock market value which probably evaporated thousand of people money and live hood been part of the plan to let Samsung and perhaps even Google have their time in the sun intentionally.

    common Lets be serious, you’re an annalist not a click bate non sense writer, i know this is an Apple Blog but sometime i think some of you are going too far with your pro Apple story.

    Apple just sold 10 million during the First IPhone 6 week end which is only 1 million more than last year, that doesn’t looks like a huge victory for me as you suggested, i expected much more than that with this year offering.

      1. Everyone is doing better in China because of Low Smartphone penetration there,
        take a closer look at Xiaomi.

        i am looking at Apple ability to take user away from Android not just for one quarter but during en entire year since that will says a lot about the Strength or their ecosystem and brand value
        .
        i focusing more on some saturated market such as the US and Europe were the majority of their new user might come from Android and also because what happen in these country will tell a lot about their future in an extremely competitive and non friendly market such as China

        1. That’s not what you originally stated. Please keep it coherent and contiguous. Your contributions are muddled and do not add to any possibility for discourse.

          1. it is you who do not get my point which was directed a @benbajarin:disqus because i bet with him that the new IPhone 6 et 6+ would not take user away from Android, therefore there was no need for me to focus on China.

    1. I think you are missing the point of what I said. Strategically I believe there is a whole lot more at play than many people realize. This was just one way to look at it.

      To your point about Android, a new survey from Umeng called out that 40% of high-end Android buyers China intend to buy the new iPhone. Also hearing from US carriers that conversions from Samsung phones to iPhones is staggering.

      I also have data to suggest they sold a lot more than 10m in China and are on pace for a huge holiday quarter in China and many other parts of the world.

      1. @benbajarin:disqus my point was you are trying to invent way to give Apple credit where there was none, Apple own internal memo tell us everything that need to be known about their mindset to led them to the IPhone 6 6+ and none of it sounds like clear deliberate strategy beyond simply responding to market demand.

        a survey in China doesn’t say everything.
        China is growth market with a very low Smartphone penetration, therefore an Apple win there wont be necessarily at the expend of Android as you suggested, the dynamic is different.

        to better evaluate Apple ability to take user Away from Android we need to focus more and saturated market such a the US their own market and Europe where people are more susceptible to many variation such as Low price and value per buck.

        1. China has very low smartphone penetration? There are just about to cross the 50% range with nearing 600m smartphones in active use.

          Also I pointed out the the US carrier stats I am seeing. They are shocked at the conversions. You can’t explain Apple’s large numbers of iPhone sales without realizing there is conversion happening from Android. Also Yankee group, Kantar, and our firm have hard data active and increasing conversion rates from Android in US, Europe now, as well as China.

          1. Apple has always have a Huge sell number with each new release, but i don’t think it is a good indication because a huge chunk of that come primarily from China which is a growth market.

            Also it’s not new for a lot of android user to switch to IOS with each new release but within the next 3 -6 -9 months Android OEM often introduced a host of new phone that get plenty of those user back and even more

            a Good indication will be to look a their growth rate of their share in some specific saturated market where the High end user are such a the US and Europe relative to that of android minus the growth of the entire market to get a real sense of that.

            Total sell wont tell us all the story about the conversion rate

  8. Apple does make mistakes but it always know what it is doing. I believe they saw Samsung as a weak competitor that had no ability to truly innovate. HTC has always shown it could make better phones than Samsung. Luring Samsung to overextend itself by feigning the inability to counter Samsung’s products probably was a conscious plan on Apple’s part. Apple let Samsung develop the market for “phablets” while developing the technology beyond what Samsung could copy and steal the market from them. It seems to be working quite well.

    1. Apple saw Samsung as a “slavish copier,” and responded with 1) lawsuits which revealed that trade dress and patent law are weak and ineffectual, 2) new partnerships with qualified non-competitors (as much as possible), and 3) new capabilities that heavily rely on the integration of hardware, software, and services — as Cook now emphasizes with the phrase “Only Apple.”

      I just don’t think Apple spends any brain cycles plotting traps for competitors. Instead, it is focused on making valued and satisfying products and capabilities that are difficult to truly copy.

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