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Samsung's dilemma: How to attack its customer (Apple)

July 23, 2010: 12:19 PM ET

Samsung makes a fortune building the parts for the iPhone.  How do they compete with the iPhone at the same time?

According to iSuppli, Samsung makes three of the most expensive and important parts of the iPhone 4, The processor, the SDRAM and Flash storage.  On a 16GB iPhone that comes out to over $50.  On a 32GB iPhone, that price heads towards $75, making Samsung responsible for around a third of the $187 total building cost of the iPhone.

Quick Math: If Apple (AAPL) sells 40 million iPhone 4s, that's over $2 billion in revenue for Samsung.

iSuppli estimates

But, like a lot of Asian electronics conglomerates, Samsung sells its own line of phones. Some, like the Android-powered  Samsung Galaxy S line (reviewed here), compete directly with the iPhone.   How do you compete against a product that you also financially want to to be successful?

Well, it turns out that it gets tricky.  Samsung and Apple have traditionally laid off of each other for the most part.  That is, until Samsung decided to adopt Android.

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