As Apple stalls, Samsung soars: who’s the innovator now? 08 Mar 13
This week, Judge Lucy Koh reduced the $1.05 billion damages awarded to Apple in its Northern District of California showdown with Samsung, and ordered a new jury trial to determine how much of the remaining money the US company should receive. This was the latest setback for Apple which, despite its victory, did not get from Koh the real prize of a permanent injunction against its Korean competitor. As the dispute drags on, Apple risks losing more and more of the bargaining power it will need for the settlement negotiations that will eventually have to take place. But it faces another, potentially far more crucial, battle outside of the courtroom, where its brand is taking a major hit.
Apple’s market cap fell to its lowest point in over a year this week. Some investors appear to be losing confidence in the company, partially because of worries over its longer-term product strategy. Whether those concerns are well-placed or not, they must surely be setting alarm bells ringing for a company that models itself as an innovation leader.
Recent news of Samsung, on the other hand, paints a picture of a company that is furthering its capacity for innovation. This week we learned that Samsung made the most patent applications to the European Patent Office (EPO) in 2012, making it the first Asian company to top the EPO’s annual filings list. In the most recent issue of IAM, we revealed that Samsung possesses the largest portfolio of active US patents. Patenting statistics do not necessarily tell us how innovative a company is, of course, but they can be indicators of its investment in R&D, and that means that they can be deployed as powerful marketing tools by any company that wants to be perceived as an innovative force.
Samsung has been honing this image in other ways, too. On Wednesday, it was reported that it will be acquiring a 3% stake in ailing Sharp, a move which could improve its access to display technology. Last month, the company announced the launch of a new Open Innovation Center in Silicon Valley. As well as enabling collaborative R&D, the facility will also present Samsung with an opportunity to scout for potential future investments and acquisition targets.
Apple’s ambitions are less clear. The company has amassed plenty of cash and could make a powerful statement by elucidating just how much of that it will plough into R&D and strategic acquisitions; but it has given little indication of what, if anything, it plans to do with it. Furthermore, most of us would not necessarily think of Apple in terms of collaboration on R&D with other companies or engagement in open innovation – things which Samsung is clearly keen to broadcast about itself.
Not so long ago, Samsung was viewed by many as a company focused on cut-price mass production, desperate to catch up with Apple and its indomitable brand. But which of the two companies looks the more innovative today? There’s not necessarily a right or wrong way to innovate; and it could just be the case that Apple has more ground-breaking products up its sleeve but prefers, for whatever reason, to keep as much as possible under wraps. Nevertheless, Samsung seems to be getting all of the good news lately, while Apple is receiving some particularly negative press.
As indicated by BrandFinance’s Global 500 2013, this is having a palpable effect on brand value for the Korean company: while Apple still tops the list with a brand worth €87.3 billion, the value of the Samsung brand skyrocketed by 54% over the past year to take second place at €58.8 billion.
Apple has built its reputation on innovation and originality, and it relies on its consumers continuing to buy into this vision. But as rivals increasingly challenge such perceptions, the company’s ultra-loyal fans may begin to question their faith in the brand. That would be a development to make senior executives’ blood run cold in Cupertino.
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