Apple Inc. (AAPL), QUALCOMM, Inc. (QCOM): Samsung’s Long-Term Plans Are Gigantic

SamsungSamsung has a lot of “next big things.” Every year it has a “next big thing,” which has effectively become its marketing tag line for nearly all of its products. Many of its devices are simply enormous phablets, though the South Korean conglomerate is also banking on a future full of software and services.

Will Samsung’s newest “next big thing” be “5G” cellular technology?

A cellular technology by any other name
Even as most of the world is still on 3G today, with only a handful of countries (including the U.S.) enjoying 4G LTE speeds, Samsung is already looking beyond 4G. Over the weekend, the company announced that it has developed a core technology of 5G cellular networking and hopes to embrace the technology by 2020, according to Yonhap News Agency.

The company demonstrated downloading an entire HD movie in seconds, and said users will be able to enjoy speeds in the tens of gigabits per second, or Gbps. That’s in contrast to current 4G LTE speeds that max out in the neighborhood of 75 megabits per second, or Mbps, which is 0.075 Gbps. Samsung claims its new tech will be “several hundred times faster” than the upcoming LTE-Advanced technology that the industry is working on right now.

In doing so, Samsung could continue becoming even more vertically integrated than it already is. This is a department that Apple Inc. (NASDAQ:AAPL) has expressed no interest in exploring, instead opting to simply buy the latest cellular baseband modems from QUALCOMM, Inc. (NASDAQ:QCOM).

Considering Apple Inc. (NASDAQ:AAPL)’s appreciation of vertical integration and focus on in-house chip design, it’s somewhat surprising that the iPhone maker hasn’t pursued cellular integration in any meaningful fashion. Cellular integration yields benefits in power consumption and battery life, two areas that Apple Inc. (NASDAQ:AAPL) values highly, but it’s easier said than done.

QUALCOMM, Inc. (NASDAQ:QCOM) enjoys a lower royalty rate on 4G technologies than it does on 3G, where it has a stranglehold. To the extent that rivals can develop their own patent portfolios surrounding next-generation wireless standards, the mobile chip giant may see further pressure on royalty rates.

Samsung deserves some credit for these achievements, since the results of its tests are impressive. However, the South Korean conglomerate is also guilty of specious marketing, since “5G” standards haven’t even been technically defined by industry bodies. There is no “5G” yet, even if companies are starting to develop technologies that may inevitably be included.

Samsung knows how well marketing can work, even if it’s a little bit of a stretch.

The article Is This Samsung’s Next Big Thing? originally appeared on

Fool contributor Evan Niu, CFA, owns shares of Apple Inc. (NASDAQ:AAPL) and QUALCOMM, Inc. (NASDAQ:QCOM). The Motley Fool recommends Apple. The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL) and QUALCOMM, Inc. (NASDAQ:QCOM).

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