Competition is a major factor that companies have to account for when spending their money. Apple and Samsung in a constant battle to create the next big thing that is "first of its kind". This competition encourages companies to innovate and beat out their competitors to make more money. Without competition their is less incentive to innovate. Consumers will still purchase a product such as a cell phone even if it doesn't have many new innovations, however if they are choosing between two they are likely to choose the one with the more innovations this is what drives a company to innovate.
Competition gives companies an incentive to thinking outside the box. All companies are going to work to advance the features they have in place, like camera, battery life, display, etc. and companies are in a constant race to do advance these features faster than the other. The companies that think outside the box and create something brand new or greatly improve a feature will gain a competitive advantage over the other. Samsung is often accused for copying Apple and vice versa because they don't want to let the competitor gain an advantage. Because of this they copy each other in an attempt to keep up and stay relevant.
In an article by CNBC it states that Apple was awarded 539 million dollars from Samsung for its infringement of various patents. Samsung's choice to copy Apple will cost them millions for their infringements, however this opportunity cost is less than the cost of falling behind their rival. This shows the power of the drive behind competition, it is worth hundreds of millions to keep up with current innovation.
No comments:
Post a Comment