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February 11, 2013

Samsung vs iPhone : Who spends more on Marketing an Research

The Above chart Shows the Expenditure of Apple on Research and Development from 2008 to 2010

The Above chart from Asymco  shows SG&A as reported by Samsung and Apple over the periods 2010, 2011 and the sum of the first three calendar quarters of 2012. Note that Samsung appears to be spending three times as much as Apple on sales and administration

Samsung challenges Apple’s cool factor - The Economic Times: Apple, for the first time in years, is hearing footsteps  and its no  longer a secret that Samsung has  been able to "Kill the iPhone star "

The iPhones  has never faced a challenger able to make a truly popular and profitable smartphone or tablet - not Dell, not Hewlett-Packard, not Nokia, not BlackBerry - until Samsung Electronics.

Samsung's Flagship  Galaxy S III smartphone is the first device to run neck and neck with Apple's iPhone in sales. Armed with other Galaxy phones and tablets, Samsung has emerged as a potent challenger to Apple, the top consumer electronics maker.

The two companies are the only ones turning profits in the highly competitive mobile phone industry, with Apple taking 72 per cent of the earnings and Samsung the rest.

However  both Samsung and Apple's  corporate DNA is hugely different, in fact as different it can be .Where Apple stakes its success on creating new markets and dominating them, as it did with the iPhone and iPad, Samsung invests heavily in studying existing markets and innovating inside them. 

That is in stark contrast to the philosophy of Apple's founder, Steve Jobs, who rejected the notion of relying on market research. He memorably said that consumers don't know what they want and in his  biography by Walter Isaacson , he famously said " We will change the Consumers preference " when someone countered him with facts that " the iPhone  did not have keypads ( still during concept testing phase ) 

In contrast, Samsung is less driven by personalities .. and  more driven by process and innovation at the lowest rung and Shop Floor .Nearly everything at Samsung, from the way it does research to its manufacturing, is unlike Apple.Apple is largely driven from Top to Bottom, Samsung is Bottom up organization where bulk of its ideas come from the market."We get most of our ideas from the market," said Kim Hyun-suk, an executive vice president at Samsung, in a conversation about the future of mobile devices and television. "The market is a driver, so we don't intend to drive the market in a certain direction," he said. 

Samsung outspends Apple on research and development: $10.5 billion, or 5.7 per cent of revenue, compared with $3.4 billion, or 2 per cent. (Samsung Electronics is slightly bigger than Apple in terms of revenue - $183.5 billion compared with $156.5 billion - but Apple is larger in terms of stock market value.) 

Samsung has 60,000 staff members working in 34 research centers across the globe, including Russia, Britain, India, Japan, Israel, China and Silicon Valley. It polls consumers and buys third-party research reports, but it also embeds employees in countries to study trends or merely to find inspiration for ideas.

Apples total R&D investment to $3.4 billion, according to the company's annual 10-K report filed with the SEC which is a 39%  increase from the $2.4 billion Apple spent on R&D in the 2011 fiscal year, though as a percentage of Apple's total sales, R&D spending actually remained flat at 2%.In comparison Samsungs Sales, General and Administrative expenes is almost  3 times Apple