The smartphone industry is dominated by two companies: Apple and Samsung. Absurdly, Canaccord Genuity recently reported that Apple and Samsung earn 109% of mobile industry profits.
(That impossible percentage results when the losses of competitors are factored in.)
Specifically, the research firm estimates that Apple earns 56% of industry profits and Samsung 53%. (Apple is actually further ahead of Samsung in profits than these numbers show, because some companies count tablet profits and others don’t.)
BlackBerry makes -4% of the profits (that’s negative four percent), Motorola -3%, and Nokia, LG and HTC each had -1%.
They’re weird numbers that don’t add up. But the point is that once again we learn that Apple and Samsung are making nearly all the money, some companies are making zero money and other companies are losing money.
But one of the dominant companies — Samsung — has a creepy approach to business, which is that they steal, cheat and lie apparently because the penalties of being unethical are far less than the rewards.
These are strong words, and will be generally received in the context of the old Apple fanboy/Android fanboy context in which those legions of users who form an emotional attachment to these companies and platforms will defend their side against the other no matter what. I can’t stop this argument from taking place and won’t even try.
However, to me, this isn’t part of that battle. Android is awesome, and most of the companies making Android handsets are blameless.
Samsung, on the other hand, has been proved beyond any doubt to be a stealing, cheating and lying organization, and I’ll review some of that proof below.
Samsung’s ethically-challenged approach to business is raising its ugly head yet again in the current damages retrial taking place in a Silicon Valley federal court.
Samsung Admits to Stealing
There’s an old Benny Hill bit that goes like this:
Benny Hill: “Hello darling. Would you fancy coming up to my room for 200 pounds?”
Girl: “Well hello, big spender. Sure. Sounds like a laugh.”
Benny Hill: “Rats, all I got on me is a fiver. Well that will have to do.”
Girl: “Hold on a minute, a fiver? What kind a girl do you take me for?”
Benny Hill: “We’ve already shown what type a girl you are, darling. Now we’re only haggling over the price.”
That’s essentially what happened in court this week when Samsung’s lawyer Bill Price said in his opening statement: “This is a case not where we’re disputing that the 13 [Samsung] phones contain some elements of Apple’s property.” What Samsung was there to dispute was the value of the property Samsung stole from Apple, and therefore the amount of the compensation to be paid to Apple.
To paraphrase Samsung’s attorney: “We’ve already shown what type a company Samsung is, your honor. Now we’re only haggling over the price.”
Apple says the price is $379 million and Samsung says they stole only $52 million from Apple in the form of intellectual property in the phones in question. (Whatever amount they arrive at will be added to the $560 million Samsung owes Apple for other thefts.)
That Samsung is a serial thief is not a point of controversy. It has been proved in court, and Samsung has not only admitted it, but put a dollar value on it.
Samsung has been proved to be a cheater and a liar, too.
Samsung was recently fined $340,000 by Taiwan’s Fair Trade Commission (FTC) for astro-turfing — hiring people to post fake comments supporting Samsung in online forums. Specifically, hired commenters were paid to trash Samsung’s competitors and praise Samsung’s products. In an industry where much of the marketing is done by passionate users, Samsung cheated by hiring fake passionate users.
The fine came in the wake of reports that Samsung was caught cheating on benchmark tests, then lying about it. In the most recent case, the Samsung Galaxy Note 2 looked for the presence of any benchmarking program and when it detected one, kicked into a special, high-power CPU mode in order to enable the phone to lie to benchmarking programs.
After this was proved beyond any doubt, Samsung lied about it and said they didn’t do it despite incontrovertible evidence to the contrary.
The company was also fined recently by Taiwan’s FTC for lying in ads about smartphone features.
This recurring pattern of stealing, cheating and lying by Samsung is creepy because they must know they’ll get caught and publicly called out. Yet they continue to do it.
It seems obvious that Samsung has made some kind of internal cost-benefit analysis about unethical business behavior, and concluded that it’s totally worth it.
For example, Samsung made a fortune on the phones containing Apple’s stolen ideas. And if they have to pay only the $52 million they’re saying they’re guilty of stealing — or the $379 million Apple says they stole — it was probably worth it.
The Samsung smartphone-buying public doesn’t care that Samsung is unethical and the rewards are higher than the penalties. So why not just reap the benefits of stealing, cheating and lying?