Korean MP3 manufacturers peeved with Samsung over flash memory discounts to Apple
posted Sep 9th 2005 10:20AM
Well, this was bound to happen: Korean MP3 player manufacturers are none too pleased with Samsung's decision to sell
out its compatriots and give archrival Apple a super
excellent discount on those 2GB and 4GB flash memory modules used in the new
iPod nano. Samsung gave Apple such a sweet deal (supposedly in the area of 50%) that now no one else can expect to
compete on price, with a spokesperson from ReignCom, the company behind the
iRiver brand, dejectedly declaring
that since they can, "hardly declare a price war with Apple. We'll counter Apple's challenge by releasing new concept
products." A Samsung Electronics exec defended the move, saying that volume buyers get better deals, and that his
company, "didn't mean to do any harm to domestic MP3 manufacturers." Hey, business is business, right?
[Thanks, Ken C.]
Fair enough if Samsung wanted to screw over creative... But they should have given the deal to native son iRiver
I smell a flame war coming... nice job Peter.
Don't you have to sell at least 99 units to get a discount?
;)
When iriver can ship millions of players a year I'm sure they too will get a discount. Apple has been very nice to Samsung, it only makes sense that it is a two way street.
Apple==more business than iRiver.
Simple as that. Samsung makes more money by selling many many more flash memory units to Apple than to iRiver. Sucks to be number 2 in this market (because Apple's got almost Microsoft-like control over DAPs) but Apple made that happen. On top of that, the nano will only increase Apple's dominance.
the ipod is the only product MP3 plater they sell that is flash - they must buy solely from samsung and a TON of it. ITs a brand name, and hey.. if hey buy 5 million units up front - why not give them a discount.
I dont own one apple product, so dont hate me
;) like someone said... business is business.
Such is the way of business. Sometimes you get the good deal, sometimes you don't. Why couldn't Creative get the same deal? Is Samsung now locked out of providing memory to Creative as well?
Darwin would be proud to see his theory proven so well.
agree with #4
I wonder when they say "new concept products" if they mean "iPod knockoffs."
Does it matter? Regardless of Apple's price and feature, Korean will only buy Korean mp3 players and cars anyway. Ask my Korean co-worker.
Plus iRiver and iAudio has always been more expensive than iPods to begin with.
#4, i dont know about nano increasing the apple's market share...
i think the market, as far as DAP is concerned is mature enough so that no single product will make significant changes to the way pies are sliced...
nano is clearly a derivative product, it's a repackaged product replacing an existing product (mini)...
on the other hand, if apple had come out with a PVP with tight itunes integration, that would have been something else...
Reminds me of the discount Dell gets on Intel CPUs.
It's just buisness.
Samsung having their name associated with the iPod is also going to effect their decision in trying to get the contract to supply the memory, hence the discount
I can't blame the Koreans for complaining - for Apple to sell the 4GB Nano profitably, the deal must've been exceptional. It's almost impossible to find a 4GB CompactFlash card for $250, yet Apple (not a company known for squeezing its margins too thin) is offering a fully-fledged 4GB iPod, replete with scroll wheel, color screen, and at least some innovation in terms of miniaturization and power management, at that price.
#11 i don't agree.
the nano is a first.
there has yet to be a digital music player with such a small form factor to size ratio like this.
just in my circle of friends that were anti-pod pepole that have now changed their minds on the music player with this new release.
i belive apple will take more of the pie and really put the hurt even more on competitors.
I have never owned any Apple products, but after seeing the Nano I went ahead and ordered one.
I'm proof that Apple expanded their market because of the Nano, and I'll bet there are plenty others like me.
[quote]Sucks to be number 2 in this market (because Apple's got almost Microsoft-like control over DAPs) but Apple made that happen.[/quote]
Almost?? Heck, it's exactly the same as Microsoft's "monopoly" on the OS side, and the funny thing is they take advantage of it just as ruthelessly (see fighting to keep itunes and ipods inaccessable to anyone else), but strangely the apple worshippers don't have a problem with it when the shoe is on the other foot.
But in the end, business is business, and the market decides who wins. Can't blame Samsung for offering vollume discounts, that's the way the game is played.
Koreans do like to buy Korean products, but that's no different than anywhere else. It's a real source of pride for them to see their once beleaguered country now on the cutting edge of technology. They've got some of the real heavy hitters in the industry right now, even if they are only no.2 in the DAP market. Just read any post on here about their LCD's and phones. Generally very nice products with higher quality that some of the other rock-bottom Asian markets (I'm looking at you, Taiwan).
However, it's been said and we all know it's true: this is just business. Hopefully, rather than complain about being shafted, iRiver's manufacturer's will just come out with a better product. The main reason the iPod is No.1 is quality and style. There's no market law that says iRiver can't beat that. Korea has the tech and designers to do it, we've seen it before.
I knew these was something werd with the nano. I simply couldn't understan how it could be that cheap when usb memory sticks with 4gb cost around $300-$400 a pop. I guess that this deal will enure that other companies won't be albe to produce ipod nono knock offs without doing some butt kissing for samsung.
Oh please! Cry me an iRiver. Publiclly whining about how your company can't get a big discount because it doesnt even ship 1/10 the number of units is beyond reproach. Sure I wish that I could go out and buy even a 4GB compact flash card for what an iPod nano costs, but I can't, and since I can't stuff an iPod into my digital camera's card slot either, I'm out of luck too.
In the end, if Apple ships a ton of units, they will help drive increased demand for large flash memory and after the boom is over everyone's prices ought to come down a little bit.
Apple did their time with the hard sell of $500 5GB players with abysmal battery life against plenty of worthy less expensive competitors. It remains possible to compete on features other than price!
More interesting to note if Samsung's own Yepp would be able to compete.
So how much was Samsung making on the flash memory in the first place?
"Darwin would be proud to see his theory proven so well."
You should pay more attention in class because this has absolutely nothing to do with Darwin.
On the other hand, I see no problem with what Apple has done. Either the competitors will go under or they'll offer us similar great deals on flash products. That's what capitalism is all about.
This is not JUST LIKE MS. MS did a lil song and dance and got IBM and then others to sign very manipulative contracts that guaranteed MS market share. Apple just competed on an open playing field. My first MP3 player was a Rio 20gb before Apple offered a size/$ ratio that was comparable. I now own an ipod. Apple won because they made a product consumers wanted. MS won because they strong armed ppl into using their products.
i have to agree with tino. i had a couple korean roommates and they only bought korean stuff. even if it was shitty. one bought an early '90s hyundai and ended up have to spend $900 a few days after he bought it for repairs.
i don't think citizens of any country have as much national pride as koreans do.
If I'm remembering the article I read recently correctly, Apple contracted with Samsung to buy a minimum of 50% of their flash memory output with this deal. That's a good deal for Samsung as well if it is true.
It also works to drive up the price of the remaining stocks of flash memory (the other 40-50% or whatever Apple ends up not buying, because available supplies for these other uses are cut in half, and scarcity drives prices.
You guys should know,
Samsung want to knock off all the small MP3P.
This year,they said only BIG3 (samsung-apple-sony) will survive in mp3 buisiness. Samsung don't sell 2GB flash memory to another company but Apple. After all small company dies, Samsung might increase the price of flash memory.
That's how Samsung getting bigger in Korea and many Koreans hate Samsung. Samsung is kinda crazy hungry dinosaur in Korea.
I think Apple should buy all of Samsungs flash modules so no one can try to make "iPod nano killers"
A japanese site dissected the nano, and the 4GB model contains 2x2GB. This was covered on TUAW:
http://www.tuaw.com/2005/09/08/inside-the-ipod-nano/
"Samsung is kinda crazy hungry dinosaur in Korea"
LOL best tech related quote I've read in a while.
Flash memory discounts to Apple = less copycat products. Companies just don't have original ideas! look at iPod mini and the numerous copycat products that came out, with the most obvious being the Zen micro
the Zen micro is much different than the mini. where are you coming from, Jada? completely different shape, FM radio, different features...
you all do realize that if Samsung had given iRiver this deal, Apple would have cried "unfair competition practices", then the US goverment would have screamed 'unfair subsidies!' and then slapped massive tariffs on anything else coming out of Korea....take a look at any other industry!
On a side note: I really wish many of you would do the 'shoe on other foot' thought before belching your remarks.
----
"This is not JUST LIKE MS. MS did a lil song and dance and got IBM and then others to sign very manipulative contracts that guaranteed MS market share."
----
What are you? 7 years old? What kind of revisionist crap is this? Reading too much Howard Zinn for christ's sake? I have toe jam with a better sense of history than you.
"the Zen micro is much different than the mini. where are you coming from, Jada? completely different shape, FM radio, different features..."
please, the additional features like FM were superficial. shape? come on! The Zen micro was obviously intended at the same target buyers as the mini. A scroll bar (instead of scroll wheel), practically identical UI, availability in different colors, very similar size and capacity, etc. Even the remote that you could get for the Zen micro was identical to the iPod remote. Obviously they look different, but the micro was created as a response to iPod mini due to how well the mini was selling. It is so obvious.I won't be surprised if Creative comes out in October and announce something like Zen slim that is "1/3 the thickness of the Zen micro" or something along those lines.
samsung will use apple to kill all other flash mp3 player makers. then jack up the price to kill apple.
evil >:
Windows apologists keep claiming that Apple was never the first to market with the iPod.. which is true.. but didn't they have a contract with Toshiba for the longest time meaning the tiny HDs in the original iPod were exclusive to Apple for the longest time..
It seems this 'exclusivity' deal has been an edge for Apple for a while... the iPod's early lead was not due to hipness or design, but this Toshiba deal was very big for Apple..
The other exclusivity deal they had was the clickwheel, of course..
Now with the AAC+ (iTMS) exclusivity, they're untouchable.
.
This is called "economy of scale." It's what keeps no more than 5 companies profitable in cell phones right now. I'd say Apple is the only company making a decent profit in MP3 players these days. Everyone else is bottom feeding, losing money because they can't buy components as cheaply as Apple can.
.
.
Sure they're loosing money on each unit, but at least they're making it up on volume. ;)
Ya'll missing the real interesting aspect of this article. It's not that Apple used their market advantage to gain even a bigger advantage. Walmart does that all the time by squeezing their suppliers.
The most interesting aspect of the article is whether or not the Koreans think Samsung acted "in an unpatriotic way" and whether or not that's going to have any negative impact on Samsung in Korea.
If a Russian company did something like that, you could bet your pants on the CEO being "invited" to have a chat with Vladimir Putin quite urgently.
samsung will use apple to kill all other flash mp3 player makers. then jack up the price to kill apple.
evil >:
---------
When you have no competitors, you have suppliers fighting for your business..
..and when your prices go up, it's called PROFIT...
moron
atomb is right on. It's funny how many americans say "it's just business" when it comes to US companies getting an advantage vis-a-vis other companies, and then get all nationalistic when it comes to foreign companies doing the same. It's not an exact parallel, but the IBM/Lenovo deal was followed by americans wringing their hands about thinkpads getting ruined by the Chinese, etc., and the attempted takeovers of the oil company (I forget the name) and Maytag were similarly followed by Americans getting worked up over the nationalistic implications of this.
can't have it both ways, folks.
What Samsung is selling in flash to Apple is much more than what corean companies are able to sell as DAP in US. And I don't call unpatriotic to boost the exports.
I know about 16 people who have already ordered thier shiny new iPod Nano's. Its all about the money.
It is hillarious what globalization has done. The article really shows how Apple has become world class in cornering the market and being a sly competitor. This would've been unheard of 10 years ago but this is the third time in 5 years Apple has corned the market to further their MP3 business.
You think the Koreans were caught off guard? Yesterday's Sony announcement behind Apple shows how dramaticlly everyone was caught off guard by the Nano. We blog and bitch about what Apple is doing recreationally but a huge Fortune 100 company with billions in resources was caught off guard by the Nano. That says something.
I have a IRiver T-20 IGB, a tiny MP3 player, and voice recorder (which also has an excellent line in). The thing can only be charged through the USB port and has truly the worst human interface I have ever encountered...they must have been smoking something when they figured this out. If only I-pod would record in better audio quality, this Iriver would be In the River. And when it comes to packaging the device, I would argue that Iriver is copying Apple. Oh, and Iriver needs to fire its sales team in Europe (outside Germany). It took me 90 minutes to order one from the Benelux distributor. No wonder you can't find iriver at either Amsterdam, Dubai or Singapore airports.
I think what's interesting about the Samsung-Apple deal is its larger implications. A 40% production allocation to one customer is a defacto joint venture.
The question is what will come from this joint venture in the long term? hmmm...Apple is the number one mp3 device and online music retailer...Samsung is the new Sony and has a strong mobile phone offering.
I would speculate seeing Apple and Samsung collaborating on making an iPhone for release in the next year; a much more Apple-like device. I consider the Motorola ROKR a bastard of a product and blight on Apple's brand. I would guess Apple made a short term deal with Motorola to get on the mobile phone/mp3 market and learn from an industry leading player.
Looking at the form factor of the new iPod nano, it's not difficult to imagine mobile phone hardware and a larger and removable battery being melded to such a device to create a REAL Apple iPhone with manufacturing help and parts from Samsung.
concept ideas huh? Apple hasn't exactly needed to best anyone on price to completely blow the competition away. Concept is where all the competition fails miserably.... i find that comment funny. If it were that easy why haven't the competition just blown consumers away with their concepts already?
My prediction: Man we though Apple had a hold on the MP3 market before.... Now they will have utter and complete domination. This product is too good. Seeing it online blew me away...once i held it i was in utter amazement. Its an experience.
"It seems this 'exclusivity' deal has been an edge for Apple for a while... the iPod's early lead was not due to hipness or design, but this Toshiba deal was very big for Apple.."
Ok, I guess this disproves Asher's point that the iPod isn't like Windows.
Also, I don't really want flash memory devices. I want a hard drive. 6 GB is not enough to store all my music.
With the Samsumg/Apple deal capturing a major part of the flash memory market, the only significant player that could pressure on Apple is Dell.
If they have their wits about them, they would buy Rio now that it has gone down the pan & use its massive buying power to revive the company, force down the price of components & kick Apples ass in audio quality.
Samsung already has a deep relationship with Dell, they may have a good deal with Apple but Dell has greater potential with notebooks, Plasmas etc , etc.
Michael D or his top exec in Japan ( Joanne P?) should be on the phone on Monday to Sigmatel if they are serious about playing in the MP3 space. Selling Rio through the Dell channel has serious potential.
I have 107 gbs (18133files) of music. In a normal day i listen 8 to 10 hours of music, well i had my minidisc wich i liked very much because it allowed me to record my sets with an good quality. It was a very nice lookink md, it had no need for sonicstage because it didnt support mp3(lol).
One day i f*ck*ng broke it. So i looked into the market and there was nothing that i liked. Bad design, bad interface...
A friend of mine showed me an ipod and i just felt i had to have one, good design good interface the only problem was that it wasnt a recorder. Well 250 euros is to much money for me so i didnt bought it, recently i just had a great deal, bought an 4gb mini for 150 euros. 4gbs are more than enough for a normal person, unless you spend 24 hours changing musics, you dont want more (... its my opinion).
Ipods may not have the best audio, but they have the best design, interface and support.
For keeping ontopic, we now live in a globle village, just forget the patriosm thing, today your company maybe in your country, tomorow it will be on another if they have better deals.
Wah wah wah. Now Apple's players are cheaper AND better designed, so nobody's got anything to whine about, and now, FINALLY, the competition is going to start, uh, competing.
Or not.
Whatever...comparing Apple's "monopoly" (whatever that means...how many competitors has Apple forced out of the market by predatory pricing practices and supplier contracts? None? Righto.) to Microsoft's is absurd.
If you don't like Apple's products, there are numerous options. Go buy one. I'm sure Steve will cry himself to sleep, but I'm sure he'll get over it.
Spoken like a true zealot Andy. Bravo for turning yourself into Steve's laptop. I like my iPod Photo but people like you creep me out. Its a f-ing MP3 player for god sake.
And you are insulting. How am I a zealot? I am praising a product that is well designed and predicting how the market will react. Apple right now has a corner on the market for developing products that connect to the consumer in ways others still dont comprehend. They dont make the cheapest, or the ones with the most features...but they make good products that people love. And after seeing everyone reaction, it is obvious they have done so better than ever with this product.
I love how anyone who give Apple ther due praise is considered a zealot. Youre right.,...its a f'in mp3 player and that is the topic so i guess it i relevant. In no way am i hailing this product as being anymore than what it is.
And I can do without people like you. Ready to characterize and and the smallest hint of evidence.
Apple make good looking MP3 players that are easy to use and backed up by great marketing.
The quality isn't so good, as evidenced by the rubbish batteries they used & their lack of concern in providing a remedy to overseas customers shows where their true priorities lie.
Why is it that whenever anyone mentions the new iPods they always say 'Wow, it looks good", or " it blows every other MP3 player away".
It's an an audio player, shouldn't one of the first questions be "how does it sound" or "How does the audio output stack up against the competition?"
No because style is half of form if done correctly. iPods are practically in a class of its own. Apple is in fact expanding the market because so many of ipod owners are first time buyers of mac, dap, or even computers.
Then they keep that fresh user base because their product's performance is exceptional. Show me all the people that are complaining about the "audio output". Because its an apple product the sound is impeccable. It's part of the deal.
The only competitor Apple will have this fall is Sony, IMO. Those internal-led displays are sick. They just have to actually get it to the market now.
Where i live (Croatia) Apple products are vastly more expensive than anything else on the market. iRiver H340 is cheaper than an iPod mini. Not even the cheap Samsung memory will help that: the nano will probably be on par with other flash players here.
I know that iPods are *much* cheaper in the US but I've always had the impression they're expensive everywhere else.
Which is good for me, and hopefully for many other users who like to have an alternative. You see, due to the single fact that Apple forces me to install iTunes i will never, ever, ever buy any of their DAP's (that being said, I'm not sure if iPod nano is different in that regard?)
How is all this relevant to the topic? Mildly. I simply hope iRiver will do well cause I'd really like that at least one big competitor will stay alive and put out products that don't require using DRM-laden, unnecessary, designed-for-the-lazy-and-the-daft software like iTunes.
Six years ago Apple invested US$100 million in Samsung, does that count for anything?
you are mistaken, frantic. The iPod does not require the use of DRM music. Music bought from the iTunes music store is DRMed... just like Rhapsody, Napter and on and on. This is an obvious requirement of the music labels. But i personally dont like DRM bull either so hardly anything on my ipod is from the music store.
But I dont know where you got that all music you put in an iPod has a DRM.
frantic...
No one is forcing you to use iTunes to add or remove music to any iPod... it's highly recommend of course, and it's the easiest way, but if you actually googled it, you would find a lot of 3rd party applications (many of them absolutely free) that let you add and remove music to your iPod sans iTunes.
Question for you... have you even *tried* iTunes before you passed judgment on it?
What do you want? Other MP3 players require the use of Windows Media Player to manage music. Is that much better than iTunes because it's "standard?" (i hate WM, and i don't think it's "standard".. it just comes preinstalled on all windows machines, so PC users think it is standard)... Or are you the type that just wants to drag and drop onto the player's hard drive to add music? That's relatively crude, and most people don't want to do it that way...
As was said before, iTunes does not require that each and every track be DRMed... if you have 60 GB of MP3 from "other" sources, then you can use those 60 GB in iTunes and consequently on the iPod.
Back to the topic... I just went to the Apple store today and saw one of the new player... people will want this product because it builds on everything the iPod was before, but makes it smaller for people who want to be active.
God you apple people can talk. There is nothing revolutionary about the ipod nano, flash memory is inherently small, thin, and power frugal and they used those inherent capabilities and shrunk the clickwheel and the screen to the smallest possible extent and still be barely usable. Itunes is the worst software in the world and it is no way as easy to use or intuitive as wmp. And the fact that it rips the licenses off any drm tracks you have on the ipod that didn't come from the apple store is just an added bonus. I am sick and tired of people defending apple when they do anything. There is nothing innovative about this product, and it shows plainly that it was a rush job with the headphone hastily thrown on the bottom of the device and the remote connection discarded.
Frantic........you're a dumb croatian. Youve got like 80 incorrect facts in your post.
Joey Geracia
You have the opinion of the minority.
Nothing revolutionary? Try finding a 4 GB flash drive that DOESN'T play music for around $250. Good luck. Apple has one that WILL and for a damn good price. You can use it as a portable storage device, if you choose and get a great deal on it.
How is iTunes the worst software? Music manager and player, CD ripper, audio converter (except WMA), and CDDB access for auto-labeling your CD tracks. And all for free! How is WMP easier to use?
"And the fact that it rips the licenses off any drm tracks you have on the ipod that didn't come from the apple store is just an added bonus." -What's that supposed to mean?
Yeah, I'll admit, I like apple, but I wouldn't consider myself a zealot after requiring 2 major repairs for my iBook. But to me, you just sound like you're hating on apple for no reason.
10 and 24: It's funny how generalizations are made about Koreans. Not all Koreans, even in Korea, buy just Korean. I should know this because I am American who has lived in Korea for over a decade. They prefer to drive BMWs, if they can afford it, and they do sell iPods over here, which Koreans do buy.