Wednesday, December 26, 2012

Apple and Samsung beat out once renowned high-tech brands

The Los Angeles Times has an article about Samsung and Apple being juggernauts of the smartphone industry, and how this is bad for consumers in the long run.

From the Los Angeles Times:
It's been a tough year for old-guard tech companies including Sony, Sharp, Panasonic, Nokia and Research in Motion, which not too long ago enjoyed widespread popularity. Now, for a variety of reasons — price, slow pace of innovation, lack of coolness factor and a cutthroat market — the former stalwarts are frequently becoming second-tier options among fickle consumers.

"There is a consolidation around just a handful of players," said Bob Bellack, chief executive of Newegg North America, an online electronics retailer. "There's going to be a handful of companies that have huge resources that are able to build a castle and a moat around it, and I think that's what you're seeing. It's actually very unfortunate for consumers in the long run."

As shoppers gravitate toward a smaller pool of brands for their big-ticket electronics purchases, the effects are being seen in sales of cellphones, tablets and televisions, with industry leaders Samsung and Apple leading in nearly all categories.

In the U.S. smartphone market, "the lion's share" of growth is concentrated in the top two brands, market research firm NPD Group said. The group found that Apple's iPhone took 31% of the market in the second quarter, followed by Samsung with 24%.

And that advantage is growing. Apple and Samsung's combined smartphone unit sales that quarter rose 43% year over year as sales for other brands fell 16%. BlackBerry and Nokia didn't even make the top five brands in the U.S.

Samsung is also gaining ground in the global cellphone market: The South Korean juggernaut is set to become the No. 1 mobile handset brand in the world this year, uprooting struggling Nokia, which has held the top spot for the last 14 years, market research firm IHS said.

For companies playing catch-up, the challenge is to create devices that are technologically superior, cheaper or otherwise unique in some way, and to work more closely with wireless carriers to promote them.
This has long been one of the problems facing smaller companies: people will flock to well-known brands unless something else is substantially better; simply being a bit better won't cut it. As long as Apple and Samsung can buy up (or buy out) smaller companies that might produce something better, and as long as they can maintain quality, they will likely remain on top.

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