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Can Apple Avoid Being ‘RIMMed’ by Samsung?

Apple Store
ADE JOHNSON | Stringer | Getty Images
Apple Store

For as much credit as the technology sector gets for being innovative, it doesn’t get nearly enough recognition for its influence in our words we use on a daily basis and its contributions to our English dictionary.

As an author and one who writes extensively about technology, I’m realizing that thanks to social media giant Facebook, the words “friend” and “like” have become widely popular verbs. While Google has essentially replaced the term “search” in our dictionary as in the widely used “Google this for me.”

On Wall Street, however, names of tech companies have entered our lexicon, while also having become synonymous with either success or failures — to the extent that I have recently suggested, can Google “MySpace” Facebook? Or in other words, can Google one day render Facebook irrelevant? , which has recently overtaken both Nokia and Apple as the world’s No. 1 phone manufacturer in terms of overall sales said last week that it plans to launch an online music service to compete head-on with Apple.

This has now prompted me to ask, can Samsung “RIM” Apple? Or in other words, will Samsung be able to do to Apple what Apple has done to Research In Motion?

While many are quick to make it a foregone conclusion that Apple is the dominant power, recent evidence suggests that the race is closer than investors realize. Yet, Wall Street insists on handing over the trophy to Apple as if it’s a done deal to the extent that even Samsung’s name has become an afterthought and replaced with “Android device.”

The disrespect of Samsung has had a lot to do with what has clearly become on Wall Street a pro-Apple bias. Be that as it may, it does make me wonder how this reality has affected Apple’s ego since it has now become the world’s largest company but now has to look up to Samsung in the product category for which it has become the best known. As it stands both companies now account for more than 70 percent of the global smartphone device market.

However, what many fail to realize is that Samsung has taken the lead by focusing on the opposite of what Apple does well. It has figured out a way to use Apple’s strength for its own benefit by addressing areas such as consumers’ budgetary concerns and a focus on offering a wider selection of phones to meet the needs of any consumer at very reasonable prices — whereas Apple (for the most part) has appealed to the more affluent shopper.

Apple’s fall to second place is only part of the surprise because Samsung has no plans on stopping there and repeating the same mistakes that has killed off Research In Motion.

Now that it has overtaken the top spot in device sales, Samsung is looking to leverage that lead by attacking Apple in other areas, including its popular iTunes music distribution platform as well as its iCloud service. To that end, Samsung recently announced plans to launch its own mobile music service for its latest Galaxy smartphone model called Music Hub. It’s hard to imagine there will be an immediate impact to Apple, but it does put names such as Pandora Media and Sirius XM Radio on the alert.

Samsung has made it so music that is purchased through the service will be stored on the cloud and will then appear on all devices owned by the consumer, both on the cloud and locally for off-line listening. The best part of all of this is that Samsung will allow users to upload and store their own music to the cloud so it can be accessed from either their personal computers or smartphones. Although the company will initially offer the service for free to customers of the new Galaxy phones, it said that it plans to make it available to any competing device.

I think this is a smart play for Samsung, as it seeks to capitalize on its leadership position in the fast-growing 4G LTE segment — one that has boosted increased demand for its family of phones, which includes the Galaxy, as well as superphones.

While Samsung in making tremendous strides by pricing its phones lower, however, what it needs to do in order to truly “RIM” Apple is to figure out of way to take away Apple’s margins in the high-end devices where Apple is the clear-cut winner. For Samsung to do that, it will need to get its current customers to pay for the higher-margin phones — a task that will not come easy.

Bottom Line

As we are quick to point out all of the great things that Apple is doing and offering standing ovations for its brilliance and creativity, the company has shown a history of not playing well from behind. We first saw this when the rise of software giant Microsoft and the dominance of the personal computer almost sent Apple into bankruptcy — essentially, the word “Apple” almost became a verb of its own.

While it is grossly premature to say that Samsung is on the verge of burying Apple, it is not out of the realm of possibility that it could happen. After all, although Apple appears unbeatable today, on Wall Street there is no such thing as infinite success.

Instead, it is a cut-throat industry where the market leader (in this case Apple) is always the target of every rival wanting what it has. The question is, will Apple be foolish enough to make the mistake of allowing Samsung’s ascent to dictate its next move? Or, worse yet, will it become complacent, rest on its laurels and do nothing?

—By Richard Saintvilus, Contributor, TheStreet.com

Additional News: Don’t Buy a TV, Apple Is Working on Something Big: Munster

Additional Views: Apple Doomed? Some Think So

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Disclosures:

TheStreet’s editorial policy prohibits staff editors, reporters, and analysts from holding positions in any individual stocks. No disclosure information was available for Richard Saintvilus.

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