Apple and Samsung: Who's Hurt More by the White Label Onslaught?

Major manufacturers such as Motorola and Samsung have their work cut out for them as low-cost white-label devices flood the market.

Feb 8, 2014 at 2:00PM

If one thing was clear at this year's big Consumer Electronics Show in Las Vegas, it was that "white label" Chinese manufacturers have pulled out all the stops when it comes to offering phones and tablets at ultra-low price points. Apple (NASDAQ:AAPL) seems to have something of a defense against this low-end assault, but what about Android hardware makers such as Samsung and Nokia (NYSE:NOK)?

Foolish tech analysts Evan Niu and Rex Moore have seen it all firsthand at CES, and discuss the issues straight from the exhibit floor. In this video, Evan explains Apple's defense, but says some manufacturers will have to slash margins in order to keep up.

A full transcript follows the video.

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Rex Moore: We are wrapping up things here at the 2014 International CES. It is my pleasure to be joined by Motley Fool Technology Bureau Chief Evan Niu. Evan, you've walked around -- your feet are tired! -- for several days now. A lot of stuff going on with phones and tablets.

Evan Niu: Yes, there is a crazy amount of phones and tablets. One thing that I've definitely noticed is that it's kind of an onslaught of phones, from all of these white-label Chinese manufacturers, that are coming out on the market. Basically, they're going to blast the market out with volume, just tons of stuff.

I think the most important thing here is that a lot of these devices are pretty solid devices. They're going to be low price points, but they're going to put pressure on some of the bigger players, from a hardware perspective.

If we look at some of the hardware-centric companies, how are they going to defend against this onslaught?

Moore: Which companies?

Niu: Like Samsung, Motorola; mostly on the Android side, because Android is a little bit more commoditized on the hardware level, whereas Apple (NASDAQ:AAPL) plays more of an integrated game, so it has a little bit more of a defense strategy.

But the Motorolas, the Nokias; all these Chinese manufacturers are coming in from the bottom, and they're going to put a lot of pressure on pricing and margins. I'm going to see how they respond.

Evan Niu, CFA owns shares of Apple. Rex Moore owns shares of Google. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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