Ultimately, though, Samsung’s fundamental problem is that they have no software-based differentiation, which means in the long run all they can do is compete on price. Perhaps they should ask HP or Dell how that goes.
But we’ve seen this story before. This particular chart shows Nokia’s adjusted closing price from the day Apple released the first iPhone, in 2007, to the day in 2013 when Microsoft announced it would acquire Nokia’s struggling handset business.
[…]
For Samsung, there’s no easy fix.
Se Young Lee (and Ben Thompson again, curiously enough), 4 August, 2015:
The coming years are set to be more somber for the South Korean tech giant, as it is forced to slash prices and accept lower margins at its mobile division in order to see off competition from rivals including China’s Huawei Technologies Co Ltd and Xiaomi Inc in the mid-to-low end of the market.
Behind Samsung’s reality-check is the fact it is stuck with the same Android operating system used by its low-cost competitors, who are producing increasingly-capable phones of their own.
“The writing has long been on the wall for any premium Android maker: as soon as low end hardware became ‘good enough,’ there would be no reason to buy a premium brand,” said Ben Thompson, an analyst at Stratechery.com in Taipei.
Horace Dediu, 13 October, 2014:
So the short answer is that Samsung needs to create new categories or businesses. The challenge for them is that they need to control the platform and service infrastructure. These are currently out of their control and I’m not quite sure how they can regain that control.
Samsung Electronics’ earnings guidance for the second quarter of 2016 show the company expecting to record its strongest profits in more than two years.
[…]
The results suggest Samsung’s best quarterly performance since it made an 8.49 trillion won operating profit in early 2014 before entering a slump that it’s only recently started to bounce back from. The figures are preliminary, though Samsung is usually accurate in its forecasting.
Samsung is doomed.
For years everybody with a bit of technological background has expressed his dislike for samsung and their phones and still they keep reporting super high profits.
I for one hope they don’t make it.. but clearly that is not going to happen.
Can only vote with my money. No samsung stuff for me but it looks like samsung’s profit doesn’t care
oh well…
Samsung is only reporting normal profits
Samsung seems to adopt quite well to the changing world of smartphones with phones covering the whole spectrum of the smartphone market with matching prices. They also seem to make just about all the parts that other smartphone makers need and earning a decent pile of money from that. And they seem to put the best parts in their best phones so they are now seen as the leader instead of the copier they were labelled years ago.
Even their marketing events and software situation have gotten a lot more in line with what people like.
Samsung is doing something really well in a market where everyone is struggling.
(the advent of “good enough” china-phones is happening though, but Samsung has built up its defense as much as it could)
(as for smartphones)
LG is doomed
HTC is doomed
Sony is doomed
Huawei, Xiaomi, Oppo, Vivo? have already taken their places.
Apple is, as always, the oddbal that SHOULD be doomed, but might defy the odds. (I personally think they ARE going to be even more marginalized than they are today). But who cares, they have built up more cold hard cash than anyone thought imaginable.
Edited 2016-07-07 12:07 UTC
And there is a reason they keep reporting super high profits. Because with other phones, there is always something wrong… For example, my dad bought an Xperia U, and it had all kinds of annoyances from no MicroSD card (despite being a low-end phone with only 8GB of storage), to not being able to enable/disable data by pulling down the notification panel, to the keyboard defaulting to japanese input. Even some of the high-end Xperia’s had washed-out blacks on screens. LG phones have all kinds of weird bugs (like the compass problems on the Nexus 5X or the fact the F60 doesn’t have a calculator app). HTC has crap low-end phones and they expect to keep the company alive just by selling Ones to the hi-end (and even the novelty of those is wearing off).
Meanwhile, the Galaxy Trend Plus my dad bought when his Xperia U clapped out on its own (bad touchscreen) has been problem free. There is your answer to why Samsung sells.
Samsung’s quality is predictable and people buy into that. And you know what? I like it that way. Other firms should stop experimenting on our heads, especially in the low end.
Edited 2016-07-09 01:06 UTC
I don’t like Samsung’s software.
You still have to admit that they make phones that the end users want: good screen, fast, light, good camera, microSD, removable battery…
They are a hardware company and they do their job quite well. What more do you need to compete ? Some advertising that they seem to get just about right as well.
Perhaps, though the S6 showed that they were willing to try and sacrifice those hardware advantages. I’d be curious to know what would happen to their profits if carriers, at least in the states, would charge as much for Samsung devices as they do for an Apple device on contract. To buy them full out is about the same price in both cases, yet carriers often give Samsung devices away or charge a nominal $50 or so for them. I do wonder how much the contract system skews the results.
They make pretty good hardware. I can’t stand their awful software however.
Well, you might want to take a look at Europe, where actually buying a phone is quite a bit more common than in the US. Over here, you’ll find that Apple only has about 18% of the market (compared to 38% in the US). To me that seems to indicate that hardware subsidies don’t really benefit the Android ecosystem disproportionately.
I’d say it’s probably the other way around: with the emphasis on subsidized phones in the US, the high end smartphone segment (where all of Apple’s phones sit) is likely overrepresented in the market. If subsidies were to go away and people would have to pay their phones outright, I believe a lot of them would opt for cheaper (and therefor non-iOS) phones.
Oh, no doubt most would go cheaper. What I was curious about is what would happen inside the premium segment without the contracts. Would Samsung still have as much of a lead over, say, Motorola, Nexus, or iPhones? They’re all right around the same price for roughly equivalent devices, yet everyone in this country raves about how “cheap” Samsung is compared to the rest because of the giveaways.
The Galaxy S7 has pretty good software. Coming from a Nexus 4, I didn’t find the UX all that different — slightly more powerful, in that it supports split screen, and for some reason the GMail app didn’t have Exchange support. The only thing I miss is the rubberised edges of the Nexus. This thing feels slippery. Everything is better, except the less timely updates.
I also own a Galaxy Note 10.1 (2014) tablet, and that thing is a piece of crap, mainly due to the software. But even that has improved, with the recent (!) update to Android 5.1.1.
You could side load the Google Exchange Services apk to enable Exchange support in Gmail on the S7.
Or, just upgrade Gmail. Google added support for Exchange directly into the Gmail apk 2 or 3 releases ago.
You need time to become a brand household name. Which Samsung has. They are famous for making good phones (regardless if it’s actually true or not) so people feel comfortable buying one. “If you are unsure, buy a Samsung (or an Iphone)”.
It’s easy to see why Nokia failed when their own CEO said their phones OS was crap. Really bad move. Why people kept predicting Samsungs demise I don’t know. It could have happened for certain but there where no real indicators that it had to happen, like with Nokia. Was it just wishful thinking maybe?
oooooooooo….
med
So, is the argument then that all CE hardware companies are doomed? That all CE equipment has been commodotized?
I hope that’s not the case, I happen to like a world in which I get to pick manufacturers based on the merits of their product, not just the ‘ecosystem’. This trend towards more and more vertical integration has lead to nothing but less flexible, less innovative products and extreme vendor lock-in.
the oled tablet with S-pen and waterproof?
Nowhere. And I’d like a thick tab with huge battery.
So it’s Samsung doomed now, then Apple, then all the others, yes journalism at its best.
Maybe we should hold them up to their writings, “hey, give us a time frame for the impeding doom, and if it does not happen you quit your job in the industry, mmmkay?”, let’s see them proclaim stuff then.
Or at least stop visiting the websites that pay them, every little move helps.
Samsung has good engineering. Wouldn’t buy another laundry washer badge.
Electronics service and guarantees at my Country, on the contrary, is a mess.
As in any giant Corp. Some wings not at their best.
They’ll be right on focusing at user satisfaction chain, and pausing immediately at those markets where unable. To raise flotation line.
Okay Samsung is doomed:
https://www.google.com/search?client=ubuntu&channel=fs&q=samsung+man…
One of Samsung’s division is a high teach weapon manufacturer.
For me, though, that’s a plus.
Well, then again, my phone’s LG-made camera and gallery apps are top-notch.
But, for the most part, less software installed on my new phone, the better,
Samsung did what was suggested and arguably why they are succeeding now — they differentiated in ways that customers can see just like automakers differentiate their cars running the same underlying firmware.
– Collaboration and integration with VR and Occulus
– Samsung Pay plus the innovative MSP payment mechanism
– curved glass and waterproofing innovations
– an ecosystem of accessories,etc
Android is the same, but these days the apps make the UI and the experience, and most of them are still hosting google apps that are considered superior.
They tried with tizan and failed. An OS requires an ecosystem that brings with it economies of scale and barriers to entry, and really you have to get in early on a new segment or some innovative way that doesn’t depend on it like virtualization or binary translation (ala Rosetta) or API compatibility (ala ubuntu on windows 10).
Samsung would be doomed had they not hired a bunch of MBAs to do some basic strategy/marketing for them and put the resources in the right places. Now their handset division is flourishing.
It’s apple you have to worry about. Apple isn’t innovating the way Samsung is innovating. They will need their butt kicked like Microsoft before they get their act together.
Before you say Samsung is doomed, watch this video.
https://www.youtube.com/watch?v=6Afpey7Eldo
This will show you how big Samsung is ..
I am sorry, but those “analysts” were spewing bullshit about “software-based differentiation”, most people around here said at the time we, users, don’t want that. What matter is the quality of the hardware and the apps, the OS should be as standard as possible.
Yes its beeen said over and over.
I think ive Heard that about apple too, how is that going? Microsoft is supposed to be dead. This are very successful companies, they have good talent. Sure you can make what you want out of the tea leaves, but in the end you are ignoring one very important factor.
Samsung produces some low end phones, and people like them. At least in India, and the West no longer matters in the smartphone world. We have an operating system that is slow and crappy on any kind of hardware. Why spend a premium for say, an lg g3 or a BlackBerry PRIV. It’s going to be slow, save your money.
Samsung would have some of the highest margins in the industry. The phone division is almost certainly using transfer pricing to substantially lower their revenue and profits to reduce tax. They would pay market prices for their own hardware and IP.
…is only for the bold.
Looks this 2002 article from Dvorak about IBM
http://www.pcmag.com/article2/0,2817,367800,00.asp
“The services business is the last refuge of the damned. —Anonymous”
“This isn’t your father’s IBM. I’ll be shocked if there is anything left but a company much like Unisys—a haven for desk jockeys. IBM may even be bought by Unisys or maybe Microsoft. Go read about what happened to Nabisco once Gerstner departed. What’s left of it is owned by Kraft Foods, a former competitor.”
….I’m still waiting.
Samsung does not differentiate with software, they do it with hardware. The reason why Apple + Samsung were able to kick Nokia out of the market was that they had a CPU that did kick ass for a smart phone. Nokia wasn’t stupid, they didn’t have the right CPU for a good smartphone.
Samsungs CPU was so strong that Apple saw the writing on the wall and purchased PA Semi in order to have their own CPU, as otherwise Samsung would reserve its best CPUs for their own phones.
Now anno 2016 there is a lot more competition, but still, Samsung is leading, being able to produce at 14nm. Therefore I disagree Samsung is doomed. As long as they have the best mobile CPU, there is a case for consumers to buy their phones. Software isn’t the only thing you can differentiate on.
Samsung is doomed to be the last player standing in the Android arena.
They are one of the few companies who can produce the entire phone in house, and that gives them a tremendous advantage. If they were buying a bunch of parts from other companies, I would agree, but unlike HTC, Sony, and LG, they aren’t, or don’t have to.
Cellphones are a game where only the big survive. Apple and Samsung are really the only two companies that can survive long term since they have the patents and the manufacturing base to keep going.
Samsung also has Tizen waiting in the wings if they get tired of Android. How would that be for software differentiation? Although, we could ask BlackBerry and Nokia about running a different OS when the market had settled on two.
I wish they really were doomed. I despise this company (specifically their electronics and mobile divisions). Everything I’ve bought from them – SSDs, phones, TVs, fridges – has failed on me, often just after the warranty expired, as if they were engineered in such a way. Fucking bastards!!