When electronics parts companies land a contract with Apple the business can be quite lucrative. Apple uses a significant supply of electronic parts of all types and demands the newest and best of everything. The wonderful news that you are now doing business with the largest company in the world is tempered with a contract that ties you in knots regarding secrecy, quality controls and details too numerous for this article.
One of the most important issues to Apple is secrecy. Working in a black box environment is critical for Apple to have an extra year or so before the copy cats reverse engineer Apple products and launch a “me-too” iWhatever.
Samsung, in addition to its line of retail electronics products, manufactures and sells an amazing variety of parts to Apple. The love/hate relationship between the companies is well known. On one hand, Apple likes the Samsung parts that make Apple products sparkle, but at the same time Samsung has abused its relationship with Apple by developing products that look strikingly like Apple products. All this is the stuff that feeds lawsuits around the world and keeps the two companies in the news.
That Apple would develop alternative parts supply sources is logical. That Samsung would like to play both sides against the middle is also a known. Samsung stands to lose a giant customer with cash to pay up front for supplies of critical parts.
A Samsung manager is currently testifying in federal court that he leaked inside information on Apple products. (See http://www.businessweek.com/news/2011-09-15/apple-ipad-data-was-given-to-fleishman-samsung-witness-says.html .)
In addition to patent infringement suits related to hardware and iOS/Android software disputes we can now add both civil and criminal actions against Samsung management. There ought to be a soap opera on daytime TV, call it “As the Apple Turns.” It seems a Samsung manager with information on the size and number of touch screens Apple ordered for the iPad 1 was paid by a research firm to leak secret information to them. They paid the Samsung manager under the table for “consulting” services.
All of this leads one to consider the long term effect on Samsung. Apple is big enough to throw its weight around and does so with great effect. The competitors of Samsung are expecting to get some new business formerly going to Samsung’s parts divisions. Apple is known to be looking around for alternative parts suppliers.
That is Greg’s Bite for today.