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.
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.
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.