Why Apple Inc. (NASDAQ:AAPL) And SAMSUNG ELECTRONIC KRW5000 (OTCMKTS:SSNLF) Should be Worried of China’s ODMs

There is little that Apple Inc. (NASDAQ:AAPL) and SAMSUNG ELECTRONIC KRW5000 (OTCMKTS:SSNLF) can do to bolster their market share in the smartphone business. For years, they have tussled on the patents front all in the effort of outdoing each other for consumer’s dollars. The battle front soon switched to apps and services where still no one emerged as the outright winner.

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Saturation Levels

Failure of Apple Inc. (NASDAQ:AAPL) or Samsung to emerge as an outright winner means their products are more than equal in terms of what they can do. It could be argued that Android and iOS devices have clocked maturity levels and know further growth in terms of market share should be expected going forward.

The latest iPhones are not in any way different from iPhones of two or three generations earlier. It is also the case with Galaxy S6 and earlier versions. Galaxy S7 which is expected to be Samsung’s flagship product this year is also not expected to be any way different.

When it comes to apps that Apple Inc. (NASDAQ:AAPL) and Samsung devices can support, there is usually no difference. The fact that devices across the divide come with virtually identical components means their functionality will always be the same.

Apple and SAMSUNG ELECTRONIC KRW5000 (OTCMKTS:SSNLF) are now at parity in terms of the flagship products they can come up with. What this means is that there is no victory scenario for either of the two. No one is ever going to boost of having a dominant market share. The only play remaining for the two tech giant is safeguarding their market share as they are poised to face stiff competition going forward.

Long Term Play

Apple is looking to refresh its Phone product line with its $200 billion worth of cash assets. Based on its current $540 billion market value, it is highly unlikely it will grow any further.

Using the massive cash pile to finance other luxury products lines such as wearables and smart devices could end up being Apple’s long term play. Samsung on the hand would look to offset weaknesses in the smartphone business by focusing more on its chip business.

China mega-ODMs stand to reap big Apple Inc. (NASDAQ:AAPL) and SAMSUNG ELECTRONIC KRW5000 (OTCMKTS:SSNLF) going slow on the smartphone business. As the two target the higher end market, the Chinese ODMs will likely look to drive prices of handsets lower.