Related Articles
In light of the much-publicised dispute over handset design patents between Apple and Samsung, many commentators have cast Samsung as the “fast follower”, while Apple is pushing at the frontier of innovation. I would argue that such commentators have things very wrong.
(Credit: Robert Schlesinger/EPA)
Samsung is winning the broader and more important war over patenting innovations, over the Fourth-Generation (4G) technological standard or platform, which enables the use of today’s smartphones, including Apple’s widely applauded iPhone, and other manufacturers’ products.
Apple, on the other hand, has little control over the foundational technologies that will enable the delivery of future telecommunications services. This isn’t to take anything away from Apple’s enviable success in the international smartphone market, but to explain, from a broader perspective, why Samsung has emerged as an innovation leader, and how that has occurred.
Controlling tech platforms
The real winner of the patents war in the telecommunications sector will be the company that owns patents related to the technological infrastructures on which all mobile devices are based. Why? Because any company that chooses to develop a product compatible with the underlying technological platform is required to make royalty payments to those firms that control the patents over that platform.
So the potential benefits of controlling the underlying technological infrastructure are enormous.
Samsung’s dominance in 4G patents
By the mid-2000s, three major international alliances had emerged to develop 4G standards, led by Nokia, which promoted long-term evolution (LTE); Qualcomm, which promoted Ultra Mobile Broadband; and a somewhat unusual cooperative venture between Samsung and Intel, both of which were focused on promoting a Korean-developed technology known as Mobile Wimax.
In recent years, Qualcomm has pulled out of the race to promote its own platform, focusing instead on promoting LTE — in part due to the perceived technological limitations of its technology, relative to the advancements made by the Europeans and Koreans.
Today, Samsung owns the largest share of patents used in both the LTE and Mobile Wimax platforms, while Apple holds very few patents over any of the network technologies.
According to one report published by the Wimax Forum, Samsung is estimated to own 15 to 20 per cent of Mobile Wimax-related patents. Meanwhile, in a separate report by iRunway (PDF), Samsung commands 9.36 per cent of all LTE patents.
Crucially, it seems that a significant share of Samsung’s patent portfolio is related to the core technology that powers both 4G platforms, namely orthogonal frequency-division multiple access (OFDMA), and is likely to be the foundation upon which future Fifth-Generation (5G) platforms will be based.
The Korean Intellectual Property Office has reported that Samsung, as well as other Korean firms, holds the largest number of patents over OFDMA.
The closest competitor to Samsung in terms of its portfolio of patents is Qualcomm. In addition to being fierce competitors in patenting their respective innovations in telecommunications, it just so happens that these two companies are some of the largest suppliers of chipsets (PDF) supplied to Apple, HTC and other smartphone manufacturers.
Samsung’s impressive performance naturally begs the question of how a company that built its fortunes in the telecommunications sector based on a strategy of fast followership — which entailed the payment of exorbitant royalty fees to Qualcomm, Nokia and others in the manufacture of 2G and 3G technologies — has undertaken such a dramatic shift into its present form.
Samsung’s transition
One could not explain Samsung’s transformation without at least mentioning its own entrepreneurship and steady accumulation of in-house knowledge capacity — a story that could be repeated for many of Korea’s innovation champions such as Hyundai, and is probably beyond the scope of this article.
Instead, let me focus on the role of the Korean state. As Ha-Joon Chang discusses in the widely acclaimed 2007 book Bad Samaritans, Samsung began life in 1938 as an exporter of fruit and vegetables.
Things changed in the early 1960s, with the coming to power of President Park Chung-Hee, who sought to industrially transform the nation. With the full support of successive governments that bore many (but not all) of the risks involved in entering new and ever increasingly knowledge-intensive industries, Samsung made its mark on the world in the manufacture of everything from ships to memory chips and telecommunications.
But since the early 2000s, Samsung has made clear its ambitions to depart from a strategy based on fast followership. Among other things, this involved the mass manufacture of handsets while paying handsome royalties to the innovation leaders from the United States and Europe, such as Qualcomm and Nokia, respectively.
Samsung participated in the Korean Ministry of Information and Communication’s IT839 Strategy, a nationally coordinated project aimed at creating, commercialising and standardising international Korean-developed technological standards.
The company, as with thousands of other Korean firms, collaborated in the development of new technological growth areas. These included 4G technological standards such as Mobile Wimax, or Wibro as it is known in Korea.
While industry leaders may have initially harboured doubts about Korea’s ambitions, Mobile Wimax has been commercialised worldwide, and is the main competitor to the LTE platform.
I don’t wish to imply that governmental efforts to nurture new sources of techno-industrial growth will always result in “success”. But the Samsung story cannot be told without discussing the strategic role of the state in even an advanced economy such as Korea’s; a point discussed further by professor Linda Weiss’ article on The Conversation.
The take-home message
Professor John Mathews, similarly to other astute observers, noted in his discussion of Korea’s current focus on promoting “green growth”: “Korea doesn’t do things by half”.
Samsung’s — and, indeed, Korea’s — effective challenge and resulting dominance over the former innovation leaders from Europe and the United States demonstrates his point well.
Commentators on the current Apple versus Samsung debate should look beyond the surface of the dispute. Samsung is the innovation leader, not Apple — and not least due to the strategic vision and coordinating role of its home government.
Sung-Young Kim does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.
This article was originally published at The Conversation. Read the original article.
