Did Samsung Screw up by focusing on Smartphones?

Photo of author

By Jacob Maslow

Samsung Android smartphone
Samsung Galaxy S4

The numbers are in and they don’t look good for South Korean conglomerate and global consumer electronics powerhouse Samsung. Thanks to a continuous slide in its global share of the smartphone market, Samsung just logged its fifth consecutive quarter of sinking operating profits. How could this be? After all, didn’t Samsung exit the lucrative fiber optics space so it can refocus on smart phones? Didn’t it shuffle some people and moved some staff out to whip its mobile unit into shape?

You have to hand it to Samsung. At least when it comes to bureaucratic bloat, inefficiency, and slow as molasses staff movement, it has shown that it doesn’t have any of the structural weaknesses corporations its size suffer from. Are you listening, Microsoft? With that said, I strongly suspect that Samsung’s latest slide, thanks to its increasingly tenuous tenure as the king of the hill of global Android smart phones is inevitable. Here’s the spoiler: Android is free. Sure, Samsung can pack its mobile gizmos with all sorts of gee whiz features and bells and whistles. Samsung can keep pushing its distinctive mobile brand. Still, at the end of the day, the Android market is a generic market. This means it is a race to the bottom.

The battle for the Android market is being fought at manufacturers’ design floors. It’s all about producing the cheapest phone. This is the risk you take when playing in a market with open systems like Android. Apple doesn’t have this problem because it has a closed system. It can continue to charge a premium for its branded product. With Samsung phones, it is different. Branded or not, Samsung can’t help but feel the pull of the low end of the market. As laudable as Samsung’s decisiveness may be at the corporate organizational and planning level, it might not be enough. Need proof? Ask Taiwan-based HTC how their smartphone play is coming along.

Images Courtesy of DepositPhotos