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Should Apple Fear Samsung's Galaxy Tablets?

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There was a time when Apple (NASDAQ: AAPL  ) was the top smartphone vendor in the world by unit volumes. Samsung would then proceed to use the same strategy it has used in other markets to come out on top with unit shipments: Infiltrate an industry by becoming a supplier to learn the nuances, and then move upmarket by imitating its customers.

Once the South Korean conglomerate jumps in, it aggressively taps its operational efficiency to release an astounding number of products in an attempt to overwhelm competitors with sheer volume. Since Samsung has no particularly strong opinions ahead of time regarding the specifics of what consumers might want, it literally tries everything. That strategy has paid off in smartphones, where Samsung now leads Apple by a healthy margin in unit volume.

Source: IDC.

However, many of these units are low-end devices that aren't very profitable. While Samsung can lay claim to the title of "top smartphone vendor in the world by unit volume," it can't do the same when it comes to profit share.

Much as Samsung was fixated on an internal corporate goal last year to simply "BEAT APPLE" in the smartphone market, the company now wants to do the same in tablets. To that end, it's expectedly pursuing the same strategy of launching a slew of products encompassing every conceivable price point and form factor to see what works.

Importantly, Samsung is beginning to close the gap with Apple in unit terms.

Source: IDC.

Samsung's tablet strategy will use both Google (NASDAQ: GOOGL  ) Android and Microsoft (NASDAQ: MSFT  ) Windows, but mostly Android. The company current has 20 different tablet variants listed on its site, ranging from 7-inch displays up to 10-inch displays. Most run Android beneath Samsung's TouchWiz, but it also sells its ATIV tablet that runs Windows 8.

Unlike Apple, Samsung is more than happy to pursue low-end markets. It just announced the Galaxy Tab 3, a 7-inch tablet with low-end specs that will be the successor to the $199 Galaxy Tab 2.

Tim Cook has always tried to prevent price umbrellas, but there's no telling how low Samsung will go to achieve volume dominance.

There's no doubt that Apple is at the center of technology's largest revolution ever and that longtime shareholders have been handsomely rewarded, with more than 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

Read/Post Comments (4) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 05, 2013, at 7:15 PM, techy46 wrote:

    Does a company win by leading in units sold or profits earned?

  • Report this Comment On May 05, 2013, at 9:12 PM, Azzras wrote:

    Does the consumer win by paying more for less?

  • Report this Comment On May 05, 2013, at 11:26 PM, tychicum wrote:

    Samsung has a lock on the toilet seat market ... SAMSUNG's SBD-970C Dynamic Digital Bidet Toilet Seat + Remote Control


  • Report this Comment On May 06, 2013, at 3:02 AM, fauxscot wrote:

    True data isn't always meaningful data. The 16 GB S4, for instance, gives the user only 8GB of space once you take out the apps and OS space. Jailbreaking/warranty voiding is the only way to reclaim it. Can you really call this competing with Apple?

    Samsung reminds me more of Texas Instruments in the days of LED watches... floundering wildly in hopes a hit will emerge, fragmented internally to match their 20-tablet product line, Android and Win8 development teams, metrics based on volumes, not profits, and a corporate culture that may be 'win at any price', but where 'win' has a nuanced set of constraints. Perhaps RCA would be a better example. Once, it owned NBC, Hertz Rent-a-car, Bantam Books, Univac (mainframes), had a consumer products division, and a number of other shall we say, unrelated enterprises, almost all of which are gone now, and RCA re-absorbed back into the GE behemoth that spawned it in the 1920's.

    Some adjustments are going to happen in this market, but do you really think Apple will come out on the losing end? Isn't it more likely that each of these outfits will zip up the high end and low end markets and in that competition, doesn't Apple already have its turf well defended? That's the real advantage of early market leaders, and pretty formidable. So formidable, it seems, that it is why Blackberry has hung on so long so wounded.

    Even if Apple suffers a similar fate, it has a few years of run left, I think.

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