Samsung Rising charts company’s ruthless quest to ‘beat Apple’ [Q&A]

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Geoffrey Cain goes deep on one of Apple's biggest rivals in his new book, Samsung Rising.
Geoffrey Cain goes deep on one of Apple's biggest rivals in his new book, Samsung Rising.
Photo: Marion Ettlinger

Apple vs. Samsung is the modern Apple vs. Microsoft — a battle between seemingly unstoppable tech titans. In his new book, Samsung Rising, author Geoffrey Cain charts the surprising story of the South Korean electronics giant. He also reveals how a burning desire to beat Apple drove Samsung’s successful strategies.

Cain, a former reporter for Time and Fast Company, based his book on more than 400 interviews. Over the years, he spoke with top Samsung and Apple executives to gain an insider’s perspective on the battle between the two companies. In this exclusive interview with Cult of Mac, he serves up surprising insight into a tech rivalry for the ages.

Inside Samsung Rising

Cult of Mac: Apple appears on the front cover of Samsung Rising. Why go with Apple over Samsung for the book cover? What makes Apple so significant a part of this story?

Geoffrey Cain: Apple loomed over Samsung’s efforts to become an admired, respected company. Former Samsung executives in the smartphone units told me they had one mission: Beat Apple. The CEO of Samsung’s office in Texas, which headed many of the anti-Apple marketing efforts, kept a photo of Steve Jobs on his desk as a reminder of his mission. When he interviewed potential executives, he pointed to the photo, and asked if they could beat “that man.”

Samsung executives told me they thought Steve Jobs was a bully and a false prophet. They took offense to Steve’s snipes at their products. [Samsung] believed, from their market research, that Android users saw themselves as smarter and more independent in their choices than Apple users.

They claimed to me that Android users saw Apple users as “sheep” who just followed what Steve Jobs said. Then, Samsung took advantage of Steve Jobs’ death to launch its first big marketing onslaught against Apple. This was a quest to beat Apple.

Samsung: Apple’s biggest rival?

Cult of Mac: Apple has been involved with plenty of big tech rivalries over the years. What makes Samsung’s story so significant and worth telling?

Cain: Imagine if Apple were so admired and powerful that Steve Jobs was convicted of white-collar crimes twice and got pardoned both times by different U.S. presidents, without serving a day in prison. And those two presidents said, “Steve Jobs is our great economic leader, a symbol of our great nation, and so he must stay at Apple.” Imagine if we called the U.S. the “United States of Apple.” Yeah, we love Apple products. Steve had his own cult there. Samsung is on another level.

Samsung is the world’s largest tech conglomerate. But it’s nothing like the giants of Silicon Valley. And unlike Apple, Facebook, Amazon and Uber, Samsung’s story has never been told in full detail. Americans know Samsung as a smartphone maker. But back in its home country of South Korea, it makes just about everything.

It consists of more than 50 affiliates that run a theme park, run hospitals, builds apartment buildings, sells life insurance, opens credit cards, makes semiconductors and displays and many parts that made the iPhone possible, and even consults on a cemetery. In Korea, you can live your entire life on Samsung products, cradle to the grave. South Koreans call their country the “Republic of Samsung.”

The strange thing is that the “Samsung Group” is not an actual company. It’s a phrase used to describe a web of companies tied under a complex shareholding structure. What they have in common is that they’re ruled by one of the wealthiest and most powerful families in tech. Chairman Lee Kun-hee tried to pass the reins to his son, Vice Chairman Jay Y. Lee, now the de facto leader, as the chairman has been confined to a hospital suite since 2014 after a heart attack.

When I was writing the book, I felt like I was watching an episode of HBO’s Succession. When Samsung tried to pass the empire to heir Jay Lee, it ignited a dramatic saga of corruption scandals, shareholder warfare and criminal convictions — including the impeachment in 2017 and imprisonment in 2018 of South Korea’s president for taking millions of dollars in bribes from Samsung executives. Samsung’s heir, Jay Lee, was convicted of bribery and spent one year of a five-year prison sentence. Then he was released when an appeals court upheld part of his bribery charge but dropped other parts of his conviction. He awaits his last verdict soon, and could return to prison. He’s still vice chairman. That would be impossible at a publicly traded U.S. corporation.

The competition between Apple and Samsung

Samsung thrives despite itscontroversial history.
Samsung thrives despite its controversial history.
Photo: Arirang

Cult of Mac: Do you have a favorite story from the book in terms of the competition between Apple and Samsung?

Cain: I spent years and years exploring the Samsung offices tasked with beating Apple. And I zeroed in on Chief Marketing Officer Todd Pendleton and his talented team, based near Dallas. Apple was disrupting the tech world by 2010. That spelled trouble for Samsung, a major television and handset maker that had been slow to respond to the iPhone onslaught.

Todd was a former Nike marketing executive who’d led the teams that signed LeBron James and other stars. All his colleagues described him as brilliant, talented and creative. Samsung knew it had a problem. Because Samsung produced so much hardware, it knew the quality of its hardware was quite good, in some cases surpassing Apple’s.

It even supplied Steve Jobs the flash memories that made advances in the iPod possible. But Samsung had a brand problem. People loved their Apple products. After Apple sued Samsung for patent infringement, Todd’s mission was to build a tribe of Android users. Samsung wanted to be the tribe’s leader.

In a smart and controversial advertising stroke, his team released a series of commercials that trolled Apple lovers. The campaign was called “The Next Big Thing Is Here.” It showed Apple users waiting in nine-hour lines outside Apple stores for the release of the next big iThing. Then they noticed a Samsung user — at the time, Samsung wasn’t well-known — nearby on a street corner, tapping away at their new phones. He’d show them his Samsung, explain that it had hardware features that Apple left out, and deflate them since the hype seemed overrated.

For a while, the strategy worked. Internal presentations and emails from the Apple vs. Samsung trials show that Apple marketers panicked and went ballistic. One Apple consultant called the moment a low point in marketing and said it was like 1997, the year Apple almost went bankrupt. Apple already put out its own series of ads, called “Genius Bar,” that were so derided, Apple pulled them.

Samsung didn’t beat Apple as a result of the campaign. But it did turn Apple vs. Samsung into a business battle similar to Coke vs. Pepsi.

Samsung vs. Apple: All about innovation?

Samsung and Apple have been battling each other for years
Samsung and Apple have been battling each other for years.
Photo: Jim Merithew / Cult of Mac

Cult of Mac: How do Apple’s and Samsung’s approaches to innovation differ?

Cain: Under Steve Jobs, Apple was the perfectionist company. The designs and user interfaces were pretty much planned down to the pixel. Apple wanted full control over the ecosystem, from the software to the hardware to the retail. When you used an iPhone or iPod, you were enveloping yourself in an experience. It was far more than a phone.

The love of Apple products gave Steve Jobs enormous leverage over suppliers, carriers and the like. When you walked into an AT&T store, you’d ask for an Apple. That wasn’t the case for other companies like Nokia and Samsung, which were essentially manufacturing companies. They had weak brands and user experiences because they were so focused on incremental hardware innovations. They lost the big picture.

Samsung and other Korean companies do innovate, but in a different way. They rely on a process called gaeseon, or incremental innovation. This is more familiar to Americans as the Japanese word kaizen, the similar process that led to successes at Japanese firms Toyota and Sony back in the day. Samsung didn’t put out first-moving products like the iPhone. It carefully studied other products, and then looked for ways to improve on them — bigger screens, faster data speeds, curved edges.

Since they were so focused on improving on other people’s products, this put Samsung employees at enormous risk of copying their competitors’ products. Indeed, Samsung executives told me that, internally, they were obsessed with “benchmarking.” And the Cupertino courts did rule multiple times that Samsung copied numerous Apple patents, though the two sides settled in the end.

I would say that yes, Samsung copied Apple at the beginning. But it also innovated on smartphones in more incremental ways that, eventually, drove Apple up the wall. And Apple, under Tim Cook, began following Samsung. Apple began releasing bigger screens and better hardware. It realized that with more smartphone options on the market, it had to move beyond its original iPhone design and release bigger upgrades with each new device. “Customers want what we don’t have” went an internal Apple presentation during the Apple vs. Samsung wars.

Apple vs. Samsung: Corporate culture clash

Cult of Mac: How do they differ as companies internally, whether that’s in structure or company culture?

Cain: Apple has a tighter, more personalized structure. That’s been changing under Tim Cook. But really, in the past, it was all about Steve and Jony Ive and a handful of other visionaries. I see Apple as essentially a design company. Design is at the core of Apple’s identity — that’s what allowed them to command the high-end of the market so early on.

Samsung is the opposite. It’s massive. It has more than 300,000 employees. It has so many offices, units, affiliates, suppliers. Because of the bureaucracy, it’s hard to move the ship.

So Samsung has embraced what Koreans call the chaebol or “wealth clan” model of doing business. Chairman Lee Kun-hee is more like the Chief Visionary Officer. He wasn’t a hands-on leader like Steve Jobs in terms of getting out the products.

Back when Chairman Lee was healthy, he’d make grand proclamations to his executives. He told them to “change everything except your wife and children,” and then set ablaze millions of dollars’ worth of faulty phones and fax machines in the 1990s. He instigated a campaign of rejuvenation among his employees.

The employees then set out to implement the chairman’s vision. They reformed their design processes, improved their manufacturing quality, and elevated Samsung to one of the big brands, through a series of high-profile product placement deals in Hollywood. Their first big victory was to defeat Sony and become a premier TV-maker. Apple lovers like to make fun of Samsung today. But, back then, the company was a disaster. There was a good chance that if you bought a product, it’d be faulty.

Who is going to be the big winner?

Galaxy S10+ camera: Samsung wasn't always a powerhouse on top of the world
Samsung wasn’t always a powerhouse on top of the world.
Photo: Samsung

Cult of Mac: Who is winning right now in the Samsung vs. Apple war?

Cain: I think Apple has gotten a strong edge over Samsung recently. But I also think that each side has scored victories against each other during the battles of the past 10 years. Samsung showed the world that there doesn’t need to be the one big device. Customers can choose from many options, form factors, price points. It also made a strong case, a few years ago before the Supreme Court, that Apple was starting to claim dubious patents to sue competitors — like a black rounded rectangle patent that a court threw out.

For a while in 2017, Samsung overtook Apple as the most profitable tech company in the world. Then Apple came back. It’s been a tight two-horse race, though we should remember that Apple makes far fewer products at higher profit margins.

I think Samsung’s lost the edge in the past two years. While Apple made a smart move to expand its software and content efforts with Apple TV, Samsung appears to be doubling down on a hardware-driven strategy. This at a time when Chinese competitors are catching up. It’s putting out foldable phones. But foldable doesn’t represent a huge break — it’s a hardware innovation that has a few years’ lifespan at most, before everyone can do it for cheap.

The problem is that Samsung was never able to get control of its own software ecosystem. It tried, but many software projects, like Milk Music, were shut down following resistance from Google. Google feared that Samsung was taking away momentum from the Android operating system. And Samsung’s OS, Tizen, hasn’t caught on.

All this shows that Samsung is, at its core, a hardware company. It announced a plan last year to supply the newest semiconductors for the coming A.I. technologies. I think that will be lucrative. But it doesn’t place Samsung in the high-end consumer electronics segment that Apple dominates.

Samsung overcomes damaging problems

Galaxy Note 7 that exploded while charging.
This Galaxy Note 7 exploded while charging.
Photo: Mr Ni/Baidu

Cult of Mac: Samsung weathered some pretty big lows over the years, like the Galaxy Note 7 that caught fire and the disastrous Galaxy Fold. However, the company bounced back each time. Why didn’t episodes like that prove permanently damaging to Samsung?

Cain: A few reasons that speak to Samsung’s unique culture as a tech giant. Back when the Galaxy Note 7 phones began igniting, posing a danger to the public, Samsung recalled them and replaced them with another batch of faulty phones. Then it had to recall them a second time. It was such a disaster that Samsung killed the phone altogether.

At the time, Samsung’s brand was in free fall. People associated the name Samsung with products that exploded. It was the butt of talk show jokes and even a Grand Theft Auto mod that allowed you to throw Note 7s like grenades at cars and people in Los Santos, the fictional California city. And Samsung responded defensively and bureaucratically. Samsung’s PR department even launched a personal attack on me, emailing a news outlet and telling them that my commentary was “inappropriate.”

You’d think that this would be the end of the brand. But the genius of Samsung’s model is its size and scale. After the Note 7 was recalled, Samsung rocketed to record profits, pushing South Korea’s stock market to all-time highs. That’s because Samsung had made massive, long-term investments in semiconductors and displays decades earlier with the long-term in mind. Samsung was picking the fruits of a long, difficult harvest.

The Note 7 fiasco was terrible for Samsung at the time, but in the big picture, it made a dent. Consumers moved on quickly and forgot. The same holds true for the Galaxy Fold. Samsung simply makes so many products that it can absorb losses and move on from disasters.

Get Samsung Rising

Geoffrey Cain’s book Samsung Rising is available to preorder now. Penguin Random House will release the book March 17.