Apple and Samsung, Going It Alone (Premium)

Apple and Samsung are similar in many ways. But their biggest similarity is perhaps a shared desire to go it alone.

In doing so, these consumer electronics giants hope to further separate themselves from the pack of smaller competitors that are trying to usurp them. That many of these companies are from China is interesting, since that is where most personal technology devices are manufactured today. And that makes me wonder if manufacturing will emerge as a future skill and differentiator for these firms as well.

We'll see. But for now, the major differentiations are happening at the component level. And that is only going to accelerate. For example, today we discovered that Apple is secretly plotting to create its own displays.

"Apple is designing and producing its own device displays for the first time, using a secret manufacturing facility near its California headquarters to make small numbers of the screens for testing purposes," a Bloomberg report notes. "The technology giant is making a significant investment in the development of next-generation MicroLED screens, [which] use different light-emitting compounds than the current OLED displays and promise to make future gadgets slimmer, brighter and less power-hungry."

Today, Apple relies on a handful of companies for its displays, but the biggest is Samsung, which is widely acknowledged as the worldwide leader in display quality.

In late 2017, Apple rightfully crowed about the quality of the display of its iPhone X, which was awarded DisplayMate's highest-ever rating. Left unsaid by Apple, however, is that the iPhone X's display was made by Samsung. And when Samsung released its Galaxy S9/S9+ just four months later---surprise!---DisplayMate crowned a new king: The Samsung devices now have the highest-rated display.

That kind of one-upmanship must be unbearable to Apple's leadership, but it's just one example of a key weakness that the firm has been addressing over time. Complicated and innovative consumer electronics devices like the iPhone require hundreds of specialized components and come from dozens of different suppliers. And some of the companies that supply these components either compete directly with Apple or at least sell similar or identical components to its competitors. In some rare cases, as with Samsung and Qualcomm, too, those partners/competitors---the "coopetition," as it were---are as powerful as Apple and could do it real harm.

But Apple has this dirty little secret that dates back to the late 1990's, when Steve Jobs returned to the company and set it up for a decade and a half of unparalleled and unprecedented growth. Apple will work with partners when it needs to. But it would also work secretly to remove them from the equation if the need was central to Apple's success.

We saw this in small ways with negligible products like early versions of Mac OS X, where Apple would steal the best ideas of its third-party developer base and integrate...