With the launch in the United States this week of the iPhone 5, the competition between Apple and Samsung to produce the smartest phone in the room shifted up a gear. Business editor Dene Mackenzie reports that both companies are good investment options.
Some of the numbers associated with Apple and Samsung continue to amaze.
Apple this week launched the next generation iPhone 5, which could not only boost the technology giant's bottom line, but could also give a significant boost to the overall United States economy.
Sales of the new iPhone could add between 0.25% to 0.5% to fourth-quarter annualised economic growth in the US, according to J.P. Morgan's chief economist Michael Feroli. Such an impact would be significant.
Apple shares were trading this week at $US689 ($NZ829) and the company has a market capitalisation of $US643 billion.
Samsung shares were trading at $US555.50 ($NZ668.40) and the market cap is much lower than Apple, at $163.7 billion.
What is not apparent to many investors and observers is that despite the rivalry that saw Apple and Samsung end up in court over patent rights, the companies are interdependent on each other for success.
According to estimates from industry research Gartner, Apple's reliance on Samsung chips for its best-selling phones and tablets will be worth as much as $US7.5 billion to Samsung this year, a 60% jump from 2011.
Apple accounts for about 9% of Samsung's revenue, making it the company's largest customer, according to Bloomberg. Given a lack of capacity for Samsung's rivals to increase supply quickly, the company is likely to remain a significant supplier to Apple in the near term.
Samsung makes several products, including DRAM (high-speed) memory chips and application processors for smart devices.
Craigs Investment Partners broker Chris Timms said that while demand for those products in PCs was slowing, he expected growth from the semi-conductor business to be strong in the coming year, supported by strong demand for tablets and smartphones - including the iPad and iPhone.
"The strength of the smartphone and tablet market, whether it is favourable to Samsung's own sales or not, will benefit the overall business, due to the company's exposure to the semi-conductor market," he said.
Apple's selling proposition against Android has long been a combination of a sleek hardware design, smooth integration of content between various Apple devices, and larger ecosystem of applications, music, games and other media that are not available or transferable to rival devices.
While Android is open and has a free-for-all approach, Apple's closed system ensures consistency and drives consumer loyalty which, in turn, provides incentive to all-important developers to continue to invest in the platform.
But some developers say it is difficult for new apps to stand out among the half-million or so applications in Apple's store vying for attention. Others say they are also eyeing with great interest the emergence of Amazon.com Inc's Kindle Fire, an attractive option because of its iPhone-like ease of payment.
"The biggest single event is when there is a new iPhone," Ben Liu, chief operating officer of mobile game-maker Pocket Gems, which owns popular iPhone games like Tap Zoo, told Reuters. Developing for Apple's platform was attractive because of the "stickiness" and "inter-operability between all of Apple's devices," he added.
Apple telegraphed many of the software changes to expect in iPhone 5 when it debuted iOS 6, its latest mobile operating system, in June.
The new iPhone will improve on the search capabilities of its Siri voice assistant and will use Apple's own mobile mapping service instead of Google's software. Other additions include turn-by-turn voice directions for navigation, and a new in-house app called "Passbook" that organises a user's electronic airline tickets, movie tickets and restaurant loyalty cards.
Mr Timms believed there was a case for both Apple and Samsung in an investment portfolio.
"While the companies are portrayed as direct rivals - and to some extent they are - both provide a different approach to gaining exposure to the electronics market."
Apple gave direct exposure to the high-end electronics market.
The company's share price was up 65% for the year to date and 108% for the start of 2011.
For those who believed Apple would be able to continue to deliver blockbuster products and remain ahead of rivals, the stock appeared attractive even at current levels. Craigs suggested accumulating on any weakness.
Samsung provided a broader exposure to the electronics markets and potentially had a lower leverage to growth. The broader exposure gave it an element of safety as weakness in one business could be offset by strength in another, he said.
Apple was a stock likely to be included in most portfolios. The company provided leverage to the latest revolution in technology where the smartphone was becoming the personal computer.
"Today's consumer wants devices that are always connected to the internet and can offer them the same capabilities which they are accustomed to with their PC. That's precisely what smartphones and tablets offer. And as it so happens, Apple has managed to do it better than anyone else."
Apple was the undisputed leader in the high-end electronics market and had created industries, which before products such as the iPhone were launched, did not exist, Mr Timms said.
There were possibly thousands of companies focused purely on creating apps for Apple.
Accessories for Apple gadgets were sold in every electronic store, every home and car stereo system now came with iPhone compatibility and some cars had factory-installed connections for iPods and iPhones.
"Apple's product is being enhanced and pushed into the everyday lives of consumers without Apple having to pay a single cent for it.
"Many rival options are being pushed out of the market by companies who have chosen Apple as the default for their accessories," Mr Timms said.
Samsung had a far broader exposure to the electronics market whereas Apple was very much focused on a handful of products and the surrounding services to enhance the value of the product. In that sense, it could be argued that Samsung was a more defensive option than Apple for an exposure to the consumer electronics market, he said.
