Apple has identified who its toughest foe is and is taking action.
If you ask knowledgeable people about competition for Apple’s iPhone, most will say it's Android mobile phones, especially Samsung. This response is acceptable but fails to identify the more prominent aggressor.
Yes, Android mobile phones are, worldwide, the largest sellers, but from a profit standpoint, the Apple iPhones pick up the major share. There is one other player that doesn't directly compete with Apple but holds the edge for Android capability: Qualcomm.
Qualcomm Snapdragon 835 vs. Apple A10
We're about to see the major rivalry of the Samsung Galaxy S8 and the to-be-announced Apple iPhone 8. But under the hood of the S8 is the Qualcomm Snapdragon 835 processor versus the Apple-designed A9 or possibly a speculated-about newer model A10. The performance of these new mobile phones will be directly attributable to which processor platform best satisfies mobile users.
There's plenty that we don't know yet about which performs better. We do know that the Snapdragon 835 can support Gigabit LTE through its 4x20-MHz carrier aggregation and 256 QAM, as Qualcomm reports:
"We are proud to continue our long and productive collaboration with Samsung to help bring the most advanced mobile experiences, such as Gigabit LTE and mobile VR, to consumers with the new Samsung Galaxy S8," said Alex Katouzian, senior vice president and general manager, mobile, Qualcomm Technologies, Inc. "Featuring a thin and light design with superior battery life, immersive multimedia, and exceptional photography with Gigabit LTE speeds, the Samsung Galaxy S8 powered by the Snapdragon 835 Mobile Platform delivers the experiences [that] today's mobile users demand."
Behind the Scenes
There are more maneuvers behind the scenes on a corporate level that also drive the rivalry. For example, Apple has filed lawsuits against Qualcomm in three different countries: China, USA, and now the UK. Essentially, Apple asserts that Qualcomm has charged unfair heightened royalties for the use of its Intellectual Property, including patents, on the selling price of the whole mobile phone. This is an unusual circumstance of a user suing a supplier while still being supplied the goods. In the U.S., Apple is seeking $1B plus other amounts in the other suits.
Furthermore, Apple has been a behind-the-scenes driver in the U.S. of the FTC complaint lodged against Qualcomm for using unfair trade practices against other semiconductor suppliers in monopolizing the mobile phone device market. This will likely face court review in May.
Meanwhile, these suits by Apple and the FTC have taken a toll on Qualcomm’s stock price. It has languished about 15% below the price at the time of the lawsuits in January 2017.
From afar, it would appear that Apple has identified Qualcomm as their most pressing competitor, with Qualcomm’s processor and internet connectivity allowing mobile phone manufacturers around the world to challenge Apple with high performance, off-the-shelf device selection, and lower prices. That's demonstrated by the 115 Chinese manufacturers that Qualcomm supplies.
Both Apple and Qualcomm are formidable profit machines. Thus, both companies have plenty of economic weapons at their disposal. We'll watch this rivalry play out over the next several months. Expect the FTC to overturn the ruling against Qualcomm now that the Trump administration is in charge, but the existing lawsuits will play a continuing role.
In the end, the outcome of how these new mobile phones perform in the market is in the hands of consumers. Place your bets now!