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Comment by Bill_Dimm | Hacker News Reader

Are you claiming that Samsung doesn't make a profit off of phones like their Galaxy S3 aside from the profit on the Samsung chips inside? If that were truly the case, why would they bother making phones when they could just let others make the phones with their chips?

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Because if you push the envelope and make a phone that's substantially more advanced than the competition, you drive demand for your components since the competition needs them to make a competitive phone.

The profits from Samsung mobile business are something like 20x those from their electronic component division.

This. Also, Samsung's mobile biz is heavily firewalled from Samsung's component biz, which allows them to make money selling parts to Apple while also competing with them, and allows Apple to sue mobile without ruining their relationship with component.

Dell suffers because the only innovation they every truly had was supply-line streamlining, but they've been totally blown away by Apple's Cook + the move to China, to the point that they don't have any advantages these days. They never bothered much with R&D, and now they are dead because of that.

Is it really possible that Apple orders aren't seen or discussed across divisions on or off the record? It seems very unlikely that the phone guys have no idea what Apple is up to.

Ya, but you would have that problem with anyone you outsource to. At least they don't trust Samsung with assembly.

I don't follow your logic. If it is the components that are the key to making a superior phone, there would be demand for those components even if Samsung didn't make a competing phone with them, unless you are assuming that all of the other phone makers would overlook the opportunity to beat out their competitors by refusing to use components that would allow them to make superior phones.

It appears to me that is basically what Apple did with the original iPhone. No one was even trying until there was a competitor that showed what could be done.

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