Store wars: Samsung, Apple gadgets at 10 paces

Samsung says Apple had nothing to do with the location and design of its new store.
Samsung says Apple had nothing to do with the location and design of its new store.
The layout is reminiscent of Apple's successful stores.

The layout is reminiscent of Apple's successful stores.

Samsung's Galaxy S III compares favourably to the iPhone 4S, but Apple's next big smartphone is around the corner.

Samsung's Galaxy S III compares favourably to the iPhone 4S, but Apple's next big smartphone is around the corner.

It's a flagship consumer electronics store on Sydney's George Street with smiling blue shirt-wearing sales staff, a minimalist design and smartphones and tablets that invite customers to pick up and play.

But according to Samsung, the new store - just a block from Apple's Sydney store - was all its own idea. The company, renowned as a "fast follower" of the market leader, is doing little to dispel the notion that it is an Apple copycat.

The store at 450 George Street opened at 8am today when Samsung also began selling its new tablet computer, the Galaxy Note 10.1. The 16GB WiFi version - which has a stylus for writing/drawing and can run dual apps in split screen mode - is priced at $589.

Great minds

Everything from the store layout to the sales staff to the products and even the packaging and promotional material is uncannily Apple-esque.

Samsung previously ambushed Apple's iPhone 4S launch by offering $2 smartphones in a temporary shop just metres away form the Apple George Street store, but now its presence is more permanent.

Samsung Australia's vice-president of telecommunications, Tyler McGee, said Apple "didn't even come into the equation when we were looking for a location [for the store]".

But come on, the layout of the store is pretty similar, right? "Well, if you look at our layout this is the layout that we use around the world and it's about basically giving the consumers the opportunity to interact, learn and play with our devices," McGee said.

Many aren't buying it - including Conan O'Brien, who recently mocked Samsung with a parody clip of a Samsung manager calling BS on Apple's charges of copying. The clip includes a send-up of Samsung's stores. Last month Samsung opened its first North American store in Vancouver, Canada.

Recipe for success

While other retailers struggle, Apple's 373 stores in 13 countries (including 14 stores in Australia) are booming, with global sales of $16 billion last year. The company sells more gear per unit area than any other retailer in the US.

Gary Allen, who runs a blog dedicated to Apple stores, ifoAppleStore, said Apple had proven it was critical for electronics companies to have a physical presence.

"It's not difficult to copy the general appearance of Apple's stores," he told Fairfax Media. "But I think Samsung will find it more difficult to copy the buzz or excitement that Apple's stores generate for its customers."

Legal battle

Samsung's stores will further inflame Apple's claims that it is competing with a copycat. The pair wrapped up their arguments in the US patent infringement battle this week, and are awaiting a jury verdict.

The case lifted the veil of secrecy at Apple, revealing a slew of iPad and iPhone prototypes and sensitive details regarding the process of designing its products (much of which occurs around a kitchen table, apparently).

But the case - and the fact that Samsung is now the market leader in consumer electronics - has also shone a spotlight on Samsung and the family-run conglomerate that owns it.

One memo relied on by Apple in its case shows Samsung's head of mobile communications, J. K. Shin, remarking that the iPhone caused a "crisis of design" at the company and demanding "let's make something like the iPhone".

Comparisons tendered in the case show a huge difference between Samsung's smartphone and tablet designs pre- and post-iPhone and iPad.

A separate 132-page Samsung document shows the company did an exhaustive feature-by-feature comparison of the iPhone and its original Galaxy S.

"Influential figures outside the company come across the iPhone, and they point out that 'Samsung is dozing off'. All this time we've been paying all our attention to Nokia, and concentrated our efforts on things like Folder, Bar, Slide," Shin wrote just after the iPhone's launch.

"Yet when our UX is compared to the unexpected competitor Apple's iPhone, the difference is truly that of Heaven and Earth. It's a crisis of design."

He adds: "When you compare the 2007 version of the iPhone with our current Omnia, can you honestly say the Omnia is better?"

Samsung said the memo was "routine" and "typical competitive analysis", despite fighting tooth and nail to have it excluded from the case. It argues Apple is trying to use the courts to stifle its biggest competitor.

Much has changed since 2007 and Samsung is now the global market leader in smartphones, with its Galaxy S III selling more than 10 million units so far.

Corruption allegations

A recent feature article by The Kernel - titled "Samsung: Power, Corruption and Lies" - took a detailed look at corruption allegations against top Samsung executives, which are rarely aired in Western media. Its current chairman, Lee Kun-Hee, had his house raided by South Korean police in 2008 following claims the company was maintaining a slush fund to bribe court officials and politicians.

Prosecutors requested a seven-year prison sentence and a $US347 million fine but Lee was sentenced to a three years suspended sentence and a $US109 million fine - and was pardoned by the South Korean government in 2009. He returned as Samsung's chairman - but internal issues remain as the Lee family is fighting in court over ownership of the company.

McGee would not comment on the court case against Apple or on how Samsung is dealing with the increased scrutiny of its practices in Korea.

This story Store wars: Samsung, Apple gadgets at 10 paces first appeared on The Sydney Morning Herald.