Apple’s War Chest, Samsung plastic, and HTC One supply

Mar 21, 2013
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Apple’s War Chest, Samsung plastic, and HTC One supply

The influence and cash flow Apple has right this minute may be squarely to blame for both Samsung's continued use of plastic to construct the GALAXY S 4 and HTC's trouble getting supply line at full speed for the HTC One. When you consider the vast number of products Apple creates that use large amounts of aluminum, you'll find that the company is really rather invested in keeping their supply of this building block in order. When you consider the must-win situation HTC has with their new HTC One device, you'll know how nervous they must be if their rumored supplier status downgrade is, indeed, a reality.

To create a massively successful device, you've got to be able to create enough supply to equal said device's demand. While marketing is vastly important when it comes to creating a value proposition for prospective buyers of your product, it's all for naught if you don't have that product out on store shelves to sell.

Such is HTC's dilemma right this minute.

As we've discussed previously, Samsung's advertising budget (marked at $401 million in 2012 alone vs HTC's measly $46 million) is set to play a major role in the upcoming battle between the GALAXY S 4 and the HTC One. It's not because of a superior product that the Samsung device will be more visible in the media. HTC is currently placing a lot of hope in viral marketing and direct shout-outs at Samsung, hoping consumers will then make an informed decision based solely on device quality. Not that one device is necessarily better than the other, but HTC is likely considering this a good strategy in the face of Samsung's continued torrential advertising downpour.

But what if I told you it was possible for Apple to (indirectly) control the components of these two devices as they go to war with one another?

Consider the amount of devices Apple sells that contain aluminum as a crucial part of their hardware. The most recent quarterly sales report has Apple shipping the following:

47.8 million iPhones
22.9 million iPads
4.1 million Macs
12.7 million iPods
=
87.5 million Apple devices that require aluminum parts in their fiscal Q1 2013

According to Strategy Analytics, Samsung shipped 15.4 million Galaxy S III units through the fourth quarter of 2012. It's not as if Samsung is hurting for cash, and it's important to note that this is just one of several Galaxy-branded smartphones on the market (Strategy Analytics put Apple's iPhone 5 specifically at 27.4 million units shipped in the same quarter). But when you're up against Apple, a company with enough cash and high enough status with suppliers to potentially buy out entire supply lines of certain components, such concerns can potentially have a very real effect on your industrial design choices.

HTC simply does not have the same status with parts suppliers that Apple does. With or without the rumor linked above being true, HTC's financial situation (when compared to Apple's) simply does not add up to tier-one priority for suppliers. For HTC, the problem rests squarely in their choice between two evils:

1. Making a product with choice components and possible supply troubles.
2. Creating a sub-par product with no supply problems at all.

No matter how awesome your product is, you still need the parts to build it before you can bring it to market and sell it.

Will we see the HTC One in stores soon? We sure hope so. Will it be delivered early enough to take a firm grasp of the hype created by HTC here not too long after it's initial reveal? We shall see!

And will Samsung make an aluminum smartphone any time soon? Though this supply war certainly isn't the only factor involved in this decision-making process, a metal phone coming from Samsung is still unlikely. Do you create a device that sells 50 million units then follow up with something all new?

Don't count on it.


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