Why Companies Secretly Use Their Competitors Products

Ethan
0

THE CORPORATE NORM

You’ll never see Tim Cook being photographed using an Android or Sundar Pichai photographed using an iPhone. Heck, Steve Ballmer even used to ban his sports team from using iPads. And if you ever ask them about it, they’ll make some outrageous comment about how the competition belongs in the recycling bin or something. 


Why Companies Secretly Use Their Competitors Products


The only notable exception to this rule that I can think of is Satya Nadella. He has not only mentioned or used an iPhone in public but he’s used it at a Microsoft keynote itself even though Windows phones were still a thing. 


But, don’t be fooled as this too was just a strategic ploy to show how Microsoft apps were now available on iOS. As you can see, companies are extremely cautious when it comes to comparing with or even mentioning a competitor’s product. 


They’re usually of the mindset that all publicity is good publicity. So, if they were to even mention a competing product, they would be driving free traffic to their competitor's products. That’s why we generally see extremely vague graphs from companies when it comes to performance like this. 


graph showing mac cpu performance vs power


Apple could just say that the M1 is 2x faster and 25% more efficient than the Intel i7 or whatever processor they’re comparing with. But, instead, they like to call the competition “the latest PC laptop chip”. 


You can find this all over the place especially when it comes to Apple. The M1 Max vs compact pro PC laptop graphics. The M1 vs 4-core and 8-core laptop chips and so on. This rule doesn’t just apply to advertising material but to corporate leaders as well. 


Companies and their executives are extremely protective when it comes to their brand image and are reluctant to give the competition even an ounce of free publicity. But see, almost all of that is usually just for show and a strategic PR play. 


When the cameras aren’t rolling, companies act quite a bit differently. In fact, their biggest public rivals are sometimes their closest allies behind the scenes. So, here are the top 7 instances in which companies secretly use their competitor’s products. 



1 - NETFLIX & AMAZON

Jumping straight into it with number 1, we’ve got Netflix and Amazon. At first glance, it might seem that these companies don’t have much in common. One is a streaming giant while the other is a retailer. 


But, if you take a closer look, you’ll remember that Amazon is also in the streaming game thanks to Prime Video. In fact, Prime Video and Netflix are by far the biggest competitors within the US market with Prime Video controlling 21% and Netflix controlling 20%. 


We should also mention that these guys have been competitors for a long time. Unlike Apple TV+, Disney+, HBO Max, and Paramount+ which were all launched relatively recently, Prime Video and Netflix were the OGs on the scene and have been competing basically since the beginning of streaming. 


So, you would think that Netflix and Amazon are sworn enemies and they are publicly, but behind the scenes, they actually have one of the biggest tech partnerships of all time. You see, Netflix has almost no tech infrastructure of their own. 


They actually use over 100,000 server instances from Amazon’s AWS for virtually all of their computing, storage, and streaming needs. 


How much does that cost you? 

Well, according to Netflix themselves, they estimated that they would spend $27.78 million per month or $333 million per year on AWS throughout 2023. That’s already quite a bit of money but this becomes even more ironic when you consider how much Amazon makes from Prime Video. 


Technically, Amazon Prime Video generates $5.16 billion worth of revenue every year. But, Amazon’s profit margins on the consumer side are quite meager. In fact, they’re operating margin stands at just 3.4%. 


On the AWS side, however, their operating margin is several times higher at 26.2%. So, out of the $5 billion that Amazon makes from Prime Video, they only keep about $175 million. But out of the $333 million they make from Netflix, they keep about $87 million. 


So, ironically, about ⅓ of Amazon’s streaming-related profits actually come from their biggest competitor Netflix. The only reason that Netflix has been able to scale so well is thanks to their biggest competitor Amazon. 



2 - APPLE & SAMSUNG

Moving onto number 2, we have one of the biggest rivalries within the tech community: Apple vs Samsung. This rivalry really needs no introduction. Apple is the king of iOS and Samsung is the king of Android. 


Worldwide, they each control about 20% of the smartphone market, and publicly speaking, these guys are sworn enemies. But, behind the scenes, iPhones are largely just Samsung phones because Apple sources everything from the screens and memory chips to the batteries and processors from Samsung.

 

Technically, Apple owns the IP to all of this tech but it’s often Samsung that actually manufactures and scales the iPhone. Apple also has similar partnerships with their other smartphone rivals: Sony and LG. 


It’s not clear how much exactly Apple pays Samsung on an annual basis but it’s at least several billion dollars. In fact, just a few years ago during the pandemic, Apple actually paid Samsung a $1 billion fine for not meeting their purchase targets. So, imagine how big the main contract has to be for a $1 billion fine to be meaningful. 



3 - SAMSUNG, LG, & SONY

From a more macro perspective though, it’s not too crazy that Apple outsources so much of their hardware manufacturing. At the end of the day, it’s not the display or memory or battery itself that sells iPhones. 


It’s how Apple weaves these components together with its software and marketing that really makes the iPhone successful. The same, however, cannot be said about our 3rd partnership between Sony and LG.

 

When it comes to the TV market, there’s no question that the flagship players especially when it comes to OLED are Samsung, LG, and Sony, except behind the scenes, it’s really just LG. In fact, Sony doesn’t manufacture any of their own OLED panels, and that’s been the case for several years now. 


Samsung on the other does make their own OLED panels, but they also buy a lot of them from LG. Enthusiasts will be quick to point out that Samsung and Sony don’t technically buy LG panels but rather that LG simply makes panels to Samsung and Sony’s specifications. 


But, this is still especially confusing given that we’re not talking about the smartphone or computer market where there’s a lot more to the product than just the screen. When it comes to TVs, the screen is the product and it’s pretty much just LG that makes all the OLED screens. 


If you’ve ever wondered why LG is two separate companies, LG Electronics, and LG Display, well this is why. LG Electronics makes its own products that they sell to end consumers while LG Display simply supplies other companies with displays. 



4 - GOOGLE & FIREFOX 

Moving onto number 4, we have Google and Firefox. Before Chrome came out in late 2008, Firefox was basically everything that Chrome promised to be. That’s why Firefox was exploding in popularity and quickly overtaking Internet Explorer. 


In fact, even after Chrome came out, Firefox controlled 30% of the global market in 2009. Unfortunately, they weren’t able to keep this up against the pressure of Google’s immense resources and ecosystem. 


But, what might surprise you is that Firefox is still around, and one of the only reasons for that is Google. In fact, Google has been funding Firefox since 2005 before Chrome was a thing and they still fund Firefox to this day. 


Initially, they were funding Firefox to help challenge the dominance of Internet Explorer. Nowadays, they fund Firefox just to save their own butts. There’s no question that Chrome is a monopoly within the desktop space controlling 65% of the market. 


By funding Firefox, however, Google can earn some plausible deniability that that’s not their intention and that they’re actually in favor of a competitive environment. 


But, the reality is that Google is very much willing to pay the big bucks to maintain their monopolies which becomes extremely evident with our next partnership.



 5 - GOOGLE & APPLE

Google and Apple’s rivalry is almost as fierce as the rivalry between Samsung and Apple, and it’s really no wonder why. Google is the owner of Android and Apple is the owner of iOS, the two biggest mobile operating systems. 


Usually, in such situations, it’s common for each company to completely avoid products from the other out of spite. You know, similar to how Microsoft still promotes Edge and Bing over Chrome and Google or how Google decided to create its own AI language model instead of partnering with ChatGPT. 


Those sorts of moves are extremely common within these rivalries but you might’ve noticed one quirk in the Google and Apple rivalry. Android phones use Google and Apple phones also use Google. But, make no mistake, this is no accident or a show of goodwill. 


It’s actually paid loyalty due to another behind-the-scenes deal. That’s right Google actually pays Apple $18 to $20 billion every single year just to be the default search engine on iOS. And that’s a massive amount of money even for Apple. 


In fact, it accounts for 14-16% of their entire annual operating profits, and it’s by far the biggest example of tech rivals collaborating. 



Also Read:

What Happened To Browser Toolbars?

Exploring Walmart's Flower Selection: Types, Prices, and Options

What Happened To The Once-massive Telecom Company Sprint

Why LinkedIn may be the most powerful social media platform

How Did Europe Fall So Far Behind In Technology



6 - MICROSOFT & LINUX

Something to note is that all of the examples that we’ve discussed so far are platonic relationships. The rivals work together only because it makes financial or business sense. 


Our last two examples, however, are less opportunistic and are simply a matter of practicality starting with Microsoft and Linux. You can ask basically anyone within the tech space and they would tell you that Linux and MacOS are objectively better than Windows. 


And it’s not an opinion-based thing, it’s a fundamental thing. Linux and MacOS are based on Unix while Windows is based on proprietary software that is far less stable and secure. That’s why blue screens of death are so common on Windows. 


Really, the only reason that Windows is still so popular is because they’re already popular. And the funniest thing is that Microsoft doesn’t even try to refute this. They actually admit that Linux is way better for a lot of applications than Windows. 


In fact, they literally have a blog article on the official microsoft.com website that’s titled “Microsoft Loves Linux”. But, they take it even one step further. 


Not only do they praise Linux but they actually use Linux internally for a bunch of applications like their multi-hundred billion dollar cloud business. But something to note about Linux is that they’re a non-profit, so it’s not like Microsoft is supporting a big tech rival like Apple or Google. 


7 - MICROSOFT & GOOGLE

Microsoft & Google with our last example which is the partnership between Microsoft and Google. To be honest, this is not really a partnership at all. It’s really the purest form of one company admitting that their rival’s product is better and secretly using it themselves. 


If you don’t know what I’m talking about, then you might want to take a seat because this one’s a shocker. Microsoft Edge actually runs on the open-source version of Google Chrome: Chromium. Why you ask? 


Well, it was clear that Chrome had decisively won the browser wars at least for the time being. They had the performance, the efficiency, the users, the developers, the extensions, and they were simply the industry standard. 


And by the late 2010s, competing against this massive moat was becoming increasingly impossible even for someone like Microsoft. So, instead of fighting this uphill battle that they were losing, Microsoft simply decided to join the moat. 



THE CORPORATE LESSON

The reason I wanted to make this article and outline all of these examples of companies using their rivals' products was not to make a fun facts list but to show how companies are often not loyal to their own products and branding. 


While they’ll put up a massive charade about how they can’t stand the other side in press releases and public events, behind the scenes, they’re more than happy to partner with anyone and everyone if it makes financial, business, or practical sense. 


So, if you’re fiercely loyal to any one brand, you might want to reconsider your perspective. At the end of the day, all that matters as a consumer is how much value you get from each of these companies. 


Everything else is just marketing and branding fluff that people won't even remember a few years down the line much less a few decades down the line. So, be careful if you find yourself buying into the hype of any one brand because the truth is, these companies don’t even drink their own Kool-aid.

Post a Comment

0Comments

Post a Comment (0)