Samsung used to have one killer draw: Its premium, big-screen devices. It offered a smartphone experience that even Apple — with its paltry-size iPhones, at least until 2014 — couldn’t match. But then the iPhone 6 and 6 Plus came out, and those phone have consistently stolen share from Samsung. The Cupertino company enjoyed the most profitable quarter of any company ever, while Samsung’s profits cratered.
There’s very little incentive for someone to buy a $650 Samsung phone over a $300 Xiaomi phone, especially in developing countries like China where most people can’t afford a high-end phones. And if someone does want to spend $650 or more, they’re better off buying an iPhone, which has a unique experience you can’t find on other phones. In fact, Apple has been crushing it in China since releasing the new big-screen iPhone 6 and iPhone 6 Plus.
These two drivers, in a nutshell, are behind Samsung’s recent decline. It lost its big-display advantage, and low-cost Chinese and Indian vendors have improved their quality, offering consumers higher value for the price. Additionally, it discarded two of its differentiators (removable battery, memory card slot) without replacing them with anything compelling. And it kept two additional ones (curved display, waterproof-ness) exclusive to other models. It stripped and divided its advantages.
And there are some deeper reasons for this
More importantly, though, Samsung didn’t build a consumer base as loyal as Apple’s. It had better products than some competitors, but often suffered from feature bloat, poor features, or complexity. So, while Apple retained loyal users even when it lacked big displays, and even when rivals offered good-enough alternatives, Samsung hasn’t been able to do the same. (At least not to the same degree.) And so now, when the company’s Galaxy S6 is lackluster, and when it hadn’t manufactured enough curved display Edge models, it didn’t have the loyal consumer base to survive unscathed. There’s a reason why Apple CEO Tim Cook mentioned the term “switchers” (consumers switching to Apple) in the last Apple earnings call: Samsung and other mobile handset companies have failed to build meaningful loyalty in their high-value consumers.
Poor product management doesn’t linger for years without poor leadership
And there are some deeper reasons for this. The first: poor product management. Too many features, too little product definition. But poor product management doesn’t linger for years without poor leadership. And that is the root cause of Samsung’s decline. Poor leadership allowed the mis-use of Samsung’s capabilities:
- Ability to offer excellent build quality / but in practice, models used creaky plastic
- Curved displays / employed for side-UI purposes, rather than something more compelling
- Excellent display quality / negated by over-saturated color settings
- Excellent camera quality / bogged down by frivolous camera features
- Ability to master the latest CPUs / marred by benchmark cheating scandals
- An army of software engineers / wasted on paper thin or me-too features
- A second army of software engineers / cast off to work on the Tizen OS
- An army of hardware engineers / without the leadership to respond to Xiaomi
- An army of research engineers / whose ideas are released too early and all at once
- An army of designers / whose ideas count less than the opinion of the business administrator
- Huge marketing budget / applied to, often, soul-less commercials
This is what lack of product management and lack of leadership looks like.
And if Samsung’s efforts in the next mobile device era are any indication (too many models; not enough refinement), things could get worse before they get better.