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Samsung Adjusts its “Pre-Empt and Out-Size” Launch Tempo

July 10, 2015

Jonathan Cheng, for the WSJ:

[Samsung] will move up the autumn launch of its oversize smartphone lineup by several weeks to mid-August, according to a person familiar with the matter.

The South Korean company’s move is part of a bid to give its Galaxy Note smartphone-tablet hybrids some breathing room before mid-September, when Apple Inc. typically unveils its refreshed iPhone—a product whose popularity has the potential to monopolize media and consumer attention for weeks.

[Last year] Not only did the iPhone 6 Plus’s 5.5-inch screen rival the Galaxy Note 4’s 5.7-inch screen, the new iPhones were unveiled six days after the Galaxy Note 4 was introduced on September 3. The Galaxy Note 4 went on sale just weeks after the new iPhones.

Despite my earlier post about Samsung’s product management, the company has taken several effective actions over the past several years, and this move is a related adjustment.

What prior actions am I referring to?

  • It was the first Android OEM to develop a global flagship smartphone, the Galaxy S, in 2010. It took other Android vendors years, in some cases, to realize they couldn’t have their A team work on 40 – 80 different products per year. And that they couldn’t fragment their sales team time and media spend, either.1
  • It took inspiration [a euphemism] from the iPhone to a much higher degree than other Android OEMs. It’s not a move I respect but, in retrospect, it was very effective. Court fines were a fraction of what market losses could have been.
  • It ramped up its media spend. Good products deserve good marketing (or at least an attempt). It took other OEMs time to realize that if you concentrate your product risk into one product, you need to back that product with media. HTC learned that the hard way.
  • Samsung created the phablet. Great move. I don’t know if it was anticipatory or an experiment, but it really doesn’t matter.
  • Finally, with both a mainstream flagship (Galaxy S) and a phablet flagship (Galaxy Note), it decided to book-end the iPhone’s annual launch. Each year, it introduced the Galaxy S in the spring and the Galaxy Note in the fall. Its intent was to capture new smartphone users and iPhone-defectors (few) prior to the iPhone’s launch, and then to offer something different (larger display) after the launch, with the Note. In a nutshell, it was a “pre-empt and out-size” tempo.

These actions worked. Samsung was the only smartphone maker to earn a profit, other than Apple. For many quarters, Apple would earn approximately 60% of the profits in the handset industry, and Samsung would earn approximately 40%. (Other companies’ profits were minimal, or negative.)

But then something changed. Apple finally introduced a larger-display smartphone, the iPhone 6 plus. Now, the “out-size” aspect of the tempo no longer makes sense. And Apple’s share of profits has climbed to 92%. So Samsung is focusing on the “pre-empt” aspect, by moving up the launch of the Galaxy Note line.

Will it make a meaningful difference? Perhaps, in a small way. I’m sure Samsung’s done the math; looked at when consumers in the US and other markets are most likely to upgrade their handsets. The August timing might align with that. And, as the smartphone market saturates, many of the late adopters aren’t loyal to particular brand, including Apple. So, an earlier Note launch might attract some of these consumers. But, fundamentally, this is a tactic; it doesn’t change the drivers of Apple’s or Samsung’s fortunes. Apple has excellent hardware and software, and an excellent ecosystem. Samsung just has really good hardware. That’s why Apple is number one in profit, and Samsung is number two. This move won’t change the overall situation.

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1 Samsung, itself, continued launching dozens of product per year, but it had a resource advantage that other OEMs did not.

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Update: I updated the last paragraph of this post to include Apple’s ecosystem, and made several other minor changes. I also added the statement and link about Apple taking 92% of the smartphone industry’s profits.

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Filed Under: Apple, Phablets, Samsung, Smartphones

Deeper Reasons Behind Samsung’s Smartphone Decline

July 7, 2015

Rob Price, for Business Insider:

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.

And Steve Kovach, also for Business Insider:

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.

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Filed Under: Leadership, Product Development, Samsung, Smartphones

Why Samsung Would Struggle to Make its Own Operating System

June 24, 2015

Sharp article by Jean-Louis Gassée, writing on Monday Note, the blog he runs with Frédéric Filloux:

When we look at what it would take for Samsung to come up with its own mobile OS, the first thing to note is that “operating system” is a misnomer. Surely, iOS and Android are operating systems in the old-school “kernel” sense: They manage drivers, memory, input and output streams, user tasks, and the like. But today, an “operating system” is much more than just a kernel, it includes rich frameworks that support a wide range of applications, games, maps, social networking, productivity, drawing… Building these frameworks is a much harder task than adapting a Linux kernel.

And the OS is just the beginning. What Samsung really wants is its own ecosystem, a set of services that will ensure its autonomy, growth, and lasting importance. It wants its own app store, maps, music/video, cloud storage…

How long would it take for Samsung to build all of this? Three years, four years? Add to this the difficulty of “skating to where the puck will be”, to divine where the industry will land four years from now.

The simple question: what is the track record of software or services from Samsung’s mobile division? It’s poor. And most of the services have been single-purpose efforts: Music Hub, WatchOn, ChatOn. All of them, easier than an operating system. All of them, shut down.

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Tip of the hat to Charles Arthur, who runs The Overspill (recommended). He found Gassée’s post and this richest excerpt (but the entire post is good).

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Filed Under: OS, Samsung, Smartphones

Wednesday Assorted Links

May 13, 2015

1. Almost all smartphones sold today have the same two flaws — and the cases you’re buying prove it. Durability and battery life. Battery life is always in the news. This is a good reminder that durability is important too. The question is, for the next $1 of R&D to spend, do you allocate it to optimizing durability? Tough call, but most might answer “no”.

(Correction: I don’t think I should have framed it that way. It really depends on what other features you’ve developed and what parts of the product you’re able to control. And, crucially, the degree of improvement you’re able to make.)

2. Why 8 and 10 CPU cores in smartphones are a good idea – a lesson from the kitchen. (Remember, not every company is in a position to optimize its own CPU.) The main point:

The clusters of cores have different performance and power characteristics. With clever scheduling the mobile OS is able to use the best core for the best job […] more cores equals […] better power efficiency, but not necessarily more performance.

3. How Smartphones Have Changed Photography, In Three Numbers. And add to that the simple ability to share them.

4. Samsung answers the Apple Watch Digital Crown with a rotating, round bezel. What they need to avoid is this.

5. Why the Verizon-AOL deal just might work: Mobile video ads are worth a lot. “Verizon didn’t buy AOL, a dying ISP—it bought AOL, a digital ad company.” Maybe because of this.

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Filed Under: Acquisitions, Assorted Links, Design, Imaging, Power, Processors, Samsung, Smartphones, Smartwatches, Verizon

The Difference Between Apple and Samsung R&D

May 10, 2015

Mobile Forward 00224 2015-05-15

Apple experiments in the lab. Samsung experiments in the market. Can you guess who’s going to have a better year?

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Filed Under: Apple, Product Development, R&D, Samsung, Smartwatches

Market Scan: 2015-05-03

May 3, 2015

The week’s most important headlines. (Except for earnings coverage; plenty of that elsewhere.) Sign up here.

Industry

  • Nest CEO Tony Fadell on the Future of the Internet (WSJ)
  • Google Now becomes a more robust platform with 70 new partner apps (ZDNet)
  • iPhone trade-ins eroding Chinese Android sales: Report (ZDNet)
  • Cyanogen looking to work with Chinese vendors to load its software on more smartphones (Android Central)

Smartphones

  • Apple: Future iPhones may sport both telephoto and wide angle cameras, patent application suggests (AppleInsider)
  • Apple: iPhone’s New Growth Engine Illustrated: China’s Middle Class (Mobile Forward)
  • More than Half of Apple’s China Levers are Unique to Apple (Mobile Forward)
  • Samsung Pay scheduled to launch in the second half of 2015 (GSMArena)
  • Xiaomi tries to end waiting period for phone buyers, amid complaints (PC World)

[Read more…]

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Filed Under: Acquisitions, Android, Apple, Assorted Links, China, Cyanogen, Google, HTC, Imaging, India, Intelligent Assistance, Interface, IOT, Market Scan, Micromax, Microsoft, Nokia, Payment, Processors, Samsung, Sensors, Smartphones, Smartwatches, Sony, T-Mobile, Tablets, Wearables - Other, Windows, Xiaomi

Market Scan Highlights

April 26, 2015

Peruse the whole thing here (it’s easy). Some highlights, with my comments.

1. The real way to tell whether Google’s wireless service is a success (BGR)

2. Why Apple has purchased camera technology company LinX and what will happen now? (i-Micronews)

  • Good read RE computational imaging, dual cameras

3. Xiaomi Boosts Its Business In India With Strategic Investment From Tata Sons Head (TechCrunch)

  • Dollar value not clear. PR value very clear

4. Xiaomi’s $205 Mi 4i mirrors the iPhone 5C design, claims 1.5-day battery (Ars Technica)

  • High performance to price ratio. Profitable? TBD

5. Full video of Vogue interview with Apple designers Jony Ive and Marc Newson posted to Web (AppleInsider)

  • Always worth it to hear the thoughts of subject matter expert or influential leader

6. Apple: First Look: Apple Watch Apps & Stats (App Annie)

  • Top category (so far) is Utility; 12% of all apps

7. Google: Android Wear’s Low-Power Ambient Mode (Daring Fireball)

8. Samsung filed for “Glastyle” and other Key Trademarks this Week (Patently Mobile)

9. Imaging: Yole on Image Sensor Future (Image Sensors World)

10. Microsoft CEO thinks there’s one BIG reason you’ll love Windows 10: Cortana (Business Insider)

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Filed Under: Acquisitions, Android Wear, Apple, Assorted Links, Design, Google, Imaging, India, Intelligent Assistance, Market Scan, Microsoft, Samsung, Sensors, Smartphones, Smartwatches, Wearables - Other, Windows, Wireless Service, Xiaomi

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