apple news/media reports
10/07/2005, 10:30am, EDT
Friday, October 7th
Apple, Samsung face possible antritust probe
Although Samsung said it would seek ways to reduce the gap of supply price between Apple and domestic MP3 player makers to less than 10 percent, other MP3 manufacturers say that Samsung may not offer the Apple's price to them, which may lead to an investigation by South Korea's government over antitrust allegations. According to the report, Samsung will consider accepting a joint order for flash memory of the MP3 player manufactures, but the announcement may not be enough to prevent South Korea's Fair Trade Commission (FTC) from launching an investigation if it finds out any sign of unfair deals between Samsung and Apple. "Many in the industry argue that Samsung has undermined fair competition in the market by supplying NAND flash to Apple at half the price it charges to domestic MP3 player makers. Rep. Kim Hyun-mee of the ruling Uri Party cited iSuppli, a research firm, that the price of 2GB NAND memory for Apple Nano was $54, which is half the market price. Samsung is cornering domestic MP3 brands by doing this, she added."
Other Korean MP3 player makers argue that Samsung should deliver enough as late as early November to allow them to bring products to market in time for the lucrative December holiday season. However, they are skeptical about whether Samsung would supply the memory by the time at an appropriate price, according to the report. "They argued the problem is that Samsung didn’t reveal the supply price for Apple, which make it impossible for them to check whether Samsung really narrow the price gap to 10 percent."
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Hasn't anyone heard about quantity discounts?
This is an easy one. Fair competition occurs when opposing parties play by the same rules. In business, fair competition occurs when all parties have equal access to markets. I know nothing about Korean law or about the particulars of Apple's contract with Samsung. On the face of it, however, I have a very difficult time seeing how Samsung's having a single customer for one of its flash drives illegally damages others who want to build devices around the same component.
Such contracts are not at all novel in the US. Two examples are Cingular's agreements with Motorola as the exclusive cell phone vendor for the black RAZR and ROKR phones. Verizon, Sprint, and NexTel seem to get along just fine without those phones.