Zero-sum Game
The global premium smartphone market is not that big. It only accounts for 20 percent in the entire smartphone market. However, Apple and Samsung are devoting much energy to the premium phone market. This is because it makes a huge profit.
Apple’s production cost per unit can vary depending on the region but it is about US$200 (229,600 won). However, the selling price is more than US$600 (688,800 won). IT news outlet The Verge said, “Profits made by selling an iPhone which is sold at US$600 (688,800 won) are higher than that of MacBook with the price tag of US$2,000 (2.3 million won).”
There are a lot of smartphone makers but Samsung Electronics has been considered Apple’s only competitor in the premium phone market over the last five years.
Until early summer last year, Apple had some 50 percent share in the premium market, while Samsung had some 25 percent share. After the Galaxy Note 7 caught fire and the iPhone 7 went on sale, however, Apple increased its market share to 70 percent at the end of last year, while Samsung saw its market share decrease to 17 percent, according to market analytics firm Counterpoint Research.
The Verge said on Feb. 3, “Samsung and Apple are actually playing a zero-sum game in the premium phone market. A company’s lost share goes to the other company.”
It also warned that Samsung needs to fight desperately against Apple, saying, “The survival game of Apple and Samsung will grow more intense this year. When Samsung fails to make consumers purchase the Galaxy S8 and Note 8 instead of the iPhone 8, its profitability will be further worsened and even may die.”
Marking the 10 anniversary of the iPhone, Apple has announced to launch the iPhone 8, the best premium phone of this year, and Samsung also plans to release an innovative product that excels the iPhone 8 in order to live down the disgrace of the Galaxy Note 7 and win back its market share. Accordingly, the competition between the two companies will be more intense than ever.