Opinion: Samsung Smartphone Ban Could Backfire and Destroy Apple (AAPL)
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Price: $298.92 +0.31%
Overall Analyst Rating:
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Dividend Yield: 0.4%
Revenue Growth %: +15.8%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.4%
Revenue Growth %: +15.8%
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Before Apple (Nasdaq: AAPL) celebrates its court victory over Samsung, it should take a step back and read through a few pages from a history book. Today management at Apple probably views its courtroom victory over Samsung as a win, but if Apple is successful in banning the popular Samsung Galaxy S III smartphone in the U.S., that victory could turn into a crushing defeat.
Any ban on smartphones is likely to be temporary and while it could hurt Samsung in the short term, in the longer term Samsung isn't going away. Banning one of the post popular electronic devices ever made will certainly create a media spectacle, and it might make Apple look weak and afraid of competition.
There are also important psychological effects Apple needs to consider. Historically people, especially consumers, always want what they can't have. Does Apple really think banning Samsung smartphones are going to keep consumers from wanting to purchase them? That is unlikely, and the ban might even create a buying frenzy. Consumers could snap-up the device before the ban goes into effect, buy on the black market or wait with bated breath for a re-vamped version from Samsung.
The psychological effects of a potential ban should not be underestimated. Pepsi celebrated the day Coca-Cola announced they were changing their recipe. They thought they had won, but suddenly everyone loved Coke more, and Pepsi wasn't celebrating a few months later when sales of Coke Classic went through the roof.
Similarly, the former Soviet government probably thought it was a heck of a good idea to ban American blue jeans. They too underestimated the intense psychological effect the ban would have and the negative sentiment it would create, as 14 year old girls went nuts. This ultimately, to some extent, led to the collapse of Soviet regime.
Maybe this is an overreaction. Maybe the lawyers are right and a ban on Samsung phones will help Apple become more profitable and grow its business. On the other hand, it could blow up in Apple's face in a big way. Apple's greatest asset right now is the goodwill of consumers. If it loses this, the company might as well shoot itself in the face and crawl into the grave. Maybe no one told Apple, but 14 year old girls control its fate, not middle-aged lawyers, and in the case of the Galaxy vs. the iPhone, perception is everything.
Any ban on smartphones is likely to be temporary and while it could hurt Samsung in the short term, in the longer term Samsung isn't going away. Banning one of the post popular electronic devices ever made will certainly create a media spectacle, and it might make Apple look weak and afraid of competition.
There are also important psychological effects Apple needs to consider. Historically people, especially consumers, always want what they can't have. Does Apple really think banning Samsung smartphones are going to keep consumers from wanting to purchase them? That is unlikely, and the ban might even create a buying frenzy. Consumers could snap-up the device before the ban goes into effect, buy on the black market or wait with bated breath for a re-vamped version from Samsung.
The psychological effects of a potential ban should not be underestimated. Pepsi celebrated the day Coca-Cola announced they were changing their recipe. They thought they had won, but suddenly everyone loved Coke more, and Pepsi wasn't celebrating a few months later when sales of Coke Classic went through the roof.
Similarly, the former Soviet government probably thought it was a heck of a good idea to ban American blue jeans. They too underestimated the intense psychological effect the ban would have and the negative sentiment it would create, as 14 year old girls went nuts. This ultimately, to some extent, led to the collapse of Soviet regime.
Maybe this is an overreaction. Maybe the lawyers are right and a ban on Samsung phones will help Apple become more profitable and grow its business. On the other hand, it could blow up in Apple's face in a big way. Apple's greatest asset right now is the goodwill of consumers. If it loses this, the company might as well shoot itself in the face and crawl into the grave. Maybe no one told Apple, but 14 year old girls control its fate, not middle-aged lawyers, and in the case of the Galaxy vs. the iPhone, perception is everything.
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