Mobile bloodshed -- the next casualty

28 Nov 2014

Samsung’s mobile business has started to struggle. There are rumors about a shakeup in the top management, including the head of the mobile division. Mobile phone business has been true bloodshed during the last 3 years, just to mention the biggest casualties Motorola and Nokia. Is Samsung the next casualty?

Samsung has been the leading Android manufacturer. It has offered high end products that are little bit cheaper than iPhones, and also lower cost phones e.g. for the emerging markets. For many consumers it has been ‘the first choice’ among Android phones. And it also has had a stronger position in the ecosystem, when it manufacturers a lot of the components itself.

But now it starts to see problems from many directions. Galaxy S5 sales have been a disappointment. China Mobile has started to sell iPhones, which significantly changes the situation in China. Apple also launched phones with larger screens, the category where Samsung has been very strong.

At the same time Chinese manufacturers create more and more pressure from another direction. They have been able to increase their quality, but also sales channels and brands. Chinese manufacturers are not anymore a threat to Samsung only in China, but in Asia as a whole, and even in Europe and North America too.

But it is not only about external factors. At least based on many comments there are many disappointed Samsung users too. Or at least users have no appetite to buy a new flagship model each year. People ask if they really need S5, when they have S4 or S3. It is not anyway a similar brand symbol than the latest iPhone.

Many people also feel Samsung’s own software and special versions of Android just cause more issues than bring real value. You have delays to get the latest Android version, quite often issues after OS or firmware updates, and Samsung’s own apps or ecosystem components (like wallet or health services) are not so easy to use or reliable.

I have personally had two Galaxy series phones. Samsung’s own services have all the time caused issues for me (latest was that I just lost some exercise data from Samsung Health). The last time I made a firmware update the battery life went down significantly and then started to become better after several fixes. With both phones I have started to encounter a serious issues to have enough battery for a workday in less than a year. I have started to prefer a pure Android phone without any Samsung flavors. I also planned it is time to try another Android manufacturer next time. And I always carry my iPhone to have one reliable phone with me (e.g. I cannot consider having my boarding pass only in a Samsung phone).

Samsung must revise its mobile strategy. It is hard for everyone to make profit with phones nowadays; Apple has its own game. Samsung is and will be an important component manufacturer. But it seems to have issues with the brand to keep people to prefer Samsung compared to other Android brands. It looks quite clear that its strategy to have its own software versions and apps doesn’t help it to differentiate in a positive way anymore. Its experiments with other operating systems than Android don’t look like a success either.

Samsung mobile needs a new direction. If we simplify, it must forget its own software trials and tailoring and offer pure Android phones with top level hardware, or it must really put effort to create a positive Samsung user experience with much larger own software packages. The first one is much easier for a hardware background company than the latter one, as Nokia example also demonstrates. It anyway looks like the Android phone business starts to look very much like PC with Windows was many years: a dominating operating system, good hardware matters, but not the hardware brand, and hardware manufacturer’s additional OS or software components just annoy people.

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