Why is Samsung the only Android success story?

Google is not terribly open with their finances, particularly when it comes to all things mobile. However, we do know they spent a meager $50 million to acquire Android. How much it cost to transform Android into a iPhone clone rather than a Blackberry clone we cannot say.

Google also spent a whopping $12.5 billion to acquire Motorola Mobility. We know that additional charges for “right sizing” Motorola will add at least several hundred million dollars to the cost side of their books.

How much have they spent developing Android, building Google Play – and licensing content – creating apps and services for Android, managing the “Open Handset Alliance”, marketing Android (and Nexus) and sharing revenues with carriers around the world? Nobody outside Google knows and Google won’t say. Costs are not broken out.

Nor is Google open about Android-related revenues. We do know they are meager. Whatever your view of Android the operating system or of various Android handsets, it is safe to assume that Android has a net cost of about $15 billion (with a b) to Google. There are very few companies in the world that could swallow a $15 billion cost on the hopes of future gains. Kudos to Google for their high-margin, high-profit near-monopoly search business that allows them to take such a massive gamble. Given the potential of mobile search and local-mobile advertising, it is at least theoretically possible that Google can make back its money.

But what of all the others involved in Android?

Why has Android been such a money loser for so many?

Android has a global smartphone install base of just over 50%, with iOS and Symbian well behind. What’s more, at least while Windows Phone remains on the sidelines and Blackberry 10 remains in the labs, nearly 2 of every 3 new smartphones sold are with the Android operating system.

The numbers are there. However, for everyone but Samsung, Android’s been a losing proposition.

Motorola Mobility has lost money on Android for at least the past 3 years. Sony Ericsson lost hundreds of millions of dollars over the past few years and earlier this year, Sony took full control of the unit. They are not out of the woods yet.

LG, which recently received the Google anointing and will offer the Android premium “Nexus” smartphone this quarter, has failed to generate actual net revenues from the platform. Their meager profits are more from appliances than smartphones, which again achieved a loss the last reported quarter. The expectation is that next year, LG’s Android smartphones will stop losing money!

Giant HTC, maker of the popular One X Android line has managed to eke out a profit. However, their revenues and profits continue to decline and the company has warned that these declines are likely to continue. Even with the popular Kindle “&droid” fork, mighty Amazon appears to be losing money on Android devices, instead making a tiny profit  on the sales of eBooks and content.

Everyone, it seems, is struggling to eke out a profit on Android. Despite huge market share numbers, profits remain elusive.

Everyone, except for Samsung. Why?

Far be it from me to cast a suspicious eye at how a South Korean chaebol breaks out its revenues. It does appear, however, that only Samsung is making any decent money – actual profits – from Android. Samsung just reported a record quarterly profit (ending July 2012) of $7.3 billion. The mobile division’s profits are estimated at approximately $4 billion. Better still for Samsung, they raised guidance for the following quarter!

How is this possible given the ‘money pit’ that Android has been for so many?

We know, following the Apple lawsuit, that Galaxy Tabs have not been a big seller. That’s not it. The company makes the well-liked albeit pricey Galaxy Note line, which has no real competition. However, analysts are predicting sales of about 10 million such devices this year. Obviously, those billions in profits aren’t coming from “phablets”. Samsung has its own Bada smartphone platform, sold in Asia. While sales are better than the feeble Windows Phone platform, they are still not enough to explain Samsung’s massive profits in mobile. Those, unlike everyone else, come from Android.

The question remains…why? Or perhaps, how?

Pundits typically argue that Apple’s massive iPhone profits come from Apple being able to charge a premium given the tight integration of hardware – software – ecosystem. Samsung does not have that luxury. They make the hardware, yes, but like everyone else in the Android world, it’s Google’s platform, Google’s services, Google’s ecosystem.

Are Samsung’s costs significantly lower? This is possible, though given the global availability of components and manufacturing outsourcing it seems unlikely. Companies like HTC and LG, Sony and even Amazon, for example, all know how to manage and source a eager global supply chain for all things mobile.

Of course, Samsung is a lead manufacturer of smartphone components, including memory chips and screens. Even Apple, despite a successful lawsuit against Samsung for “slavish copying” purchases from Samsung.

Is that where the company’s mobile unit profits are coming from? A review of their Q2 earnings report suggests that components are not the answer, rather it’s the sale of Android devices.

This seems odd to me. I have tested a number of Android devices. I love the design of the Sony Xperia line, for example. I would happily choose a HTC One X over a Samsung Galaxy. In the US, at least, where I am located, I have far more options from Motorola than Samsung. Not that I am necessarily a ‘typical’ customer but it seems to me there are plenty of alternatives to Samsung. That should be putting a limit on their profits, only it is not. They continue to soar while other Android makers falter.

Is it because Samsung, per courts of law, copied from Apple/iPhone? Is it because Samsung now spends millions of dollars advertising itself as a sort of anti-iPhone? Do people just so easily fall for that kind of marketing?

I confess that I am unable to answer my own question: why is Samsung the only Android success story? What are they doing right that everyone else is doing wrong? I would love to hear your thoughts.

Author: Brian S Hall

Brian S Hall writes about technology, immortality and food for ReadWrite, Techpinions, Unwired View and other publications. His thoughts on the 'smartphone wars' and how these are rapidly de-constructing markets, industries, business models and relationships around the world can be found on his personal site at www.brianshall.com.

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  • MyNameHasNoName

    To say Samsung is the only Android success story is a bit of a questionable statement as far as I’m concerned. Many companies have been successful with Android, only to make poor decisions later on that hurt their company. Locked bootloaders, terrible custom UIs, and a lack of support all hurt these companies. That said Asus is doing fairly well with the Nexus 7, but isn’t mentioned at all in this article.

    As far as the companies who do poorly, let’s look at Motorola: They put out a great QWERTY Slider (something I’d like to see more of) that had stock Android and an unlocked bootloader. It was a runaway success at a time when nobody in the general public really even knew what Android was. Unfortunately, they took all of the things that made the original Droid great, and got rid of them. They started putting a low quality skin (dubbed Motoblur) on all of their phones. All of their Verizon phones and many others are equipped with eFuse (which cripples your phone if it detects anything not Motorola approved), which hurts developers trying to make custom ROMs. This only adds insult to injury when Motorola drops support for phones that are perfectly capable of running the newer software.

    Some might argue that most people don’t care about custom ROMs or root or even know what they are, but many of the most popular apps require root access and are built around custom ROMs. Regardless of whether or not it’s true, the development community has some of Android’s most enthusiastic proponents. They tell everyone who will listen which phone is the one to get and, perhaps more importantly, they tell everyone what phones to avoid. Samsung embraced the development community, and look at how well they are doing now. HTC once embraced the development community as well, and for a time they were doing well but then they forgot their roots and began to neglect it. These days, HTC isn’t doing very well.

    Samsung’s friendliness towards the development community has brought it a long way and that’s something that most don’t realize. The developers are going to be some of the biggest champions of Anroid, I think Samsung realized this when they started to support independent developers. Even the locked bootloader on the Verizon (who is notorious for their attitude towards their customers and developers) S3 was defeated by a leaked unlock. I’m not saying Samsung intentionally leaked it, but I wouldn’t be surprised if they did). It also doesn’t hurt that the TouchWiz UI has improved significantly over the last few iterations to the point that it’s actually pretty usable. The other UIs have improved as well, but these OEMs still haven’t embraced the development community like they should if they want to do well.

  • http://www.staska.net Staska

    I’ve been wondering about this too. And I may have an idea. Based on a gut feeling watching the industry, and needs some research, but here it goes:

    What if it’s just the nature of mobile device business? With no free competition, dominated by very few carriers in affluent markets, who, more often than not, have a final say in picking the winners and losers among device makers. And with free/open markets mostly in poorer countries, where cheap, low margin mobile devices dominate.

    The names of smaller device makers may change, but it seems that #1 and #2 mobile handset makers have been raking the lion’s share of mobile device profits since this industry began its rapid ascent.

    It was Nokia and Motorola at first, then, when RAZR faded, it was Nokia and Samsung, now its Apple and Samsung. All the rest just come and go. They find some unique combination of features and circumstances to have their moment of fame and profits, and then the big guys catch up and the moment is over.

    This happened to Siemens Mobile, Sony, Ericsson, then to Sony Ericsson when the former two decided they couldn’t do it alone. And Motorola, when they fell asleep on RAZR success. This is now happening to RIM, HTC and former big daddy Nokia itself.

    Maybe, the way the mobile industry is structured, there is no other way. You are either #1 or # 2 mobile device maker, find a small profitable niche to last a while…. Or you’ll be dead pretty soon. Even if you are able to have your moment of fun, it won’t last very long.

  • http://twitter.com/MarionCast MarionCast

    HTC was once doing well with record sales and profits, but they seem to have rested on their laurels and now they’re paying the price. On the other hand, Samsung clearly had a strategy in mind. They targeted all kinds of users with flagships (Galaxy S II, now S III) at one end of the spectrum and the cheapest Android phones (Galaxy mini, ace, pocket) at the other end. Unlike Motorola, they didn’t just aim for the US market. All phones had a global presence, and that really helped them surpass Nokia and propel themselves to their current status as the number one mobile phone company in the world.

  • Techie_Honey

    > How much it cost to transform Android into a iPhone clone

    You really consider the Android OS an exact “clone” of the iPhone OS?

    False.

  • jnffarrell1

    Its because Apple has spent billions promoting Samsung as an equal. Some organizations can’t see the orchard for the apple trees.

  • http://twitter.com/spamidi spamidi

    100% true .. Motorola messed up developer relation with their locked bootloaders and ugly skins …. it is geeks/developers who recomend products to non-geeks .. no developer/geek would recomend a manufacturer who locks their bootloaders ..

  • AdamHui

    Yeah.. Samsung’s done win with its flexibility as it were unlocked bootloader, easy to access & modify recovery mode, removable battery & almost all supporting external storage balanced with hi compatible detailed h/w by right prices. It’s all supporting Android open source community, geek users & hacking developer to develop impossible become possible by every day by day bits next step custom rom, kernel, new amazing features, apps, themes, UI, etc. U can advancing to xda or github or other android coding community sites like rootzwiki etc to dig it deeper…Today I’ve successful to defend my sgs2 for 6,5 hours at screen on by medium apps use & H+ signals instead of max 4 hours by using tweaked Dorimanx kernel with Undervolting, threshold & cortexbrain script and I’m having angry bird using Bluetooth mouse on my Galaxy note.

  • Vadertime

    Scale and volume. Early in college, we learned about economies of scale. Add to that vertical integration, from making the base components all the way to the finished product. Before dominating the Android smartphone market, Samsung had already begun a similar strategy with LCD flatscreen TVs. It dominates that market, too.

    When I was working on my MBA, which I completed in 2005, we were required to read a case study involving Samsung Corporation and their long-term vision and strategy to dominate the consumer electronics industry. This strategy was launched almost 20 years ago. It is now bearing fruit. Compare Samsung to Sony. The first on the rise, whereas the second has experienced multiple years of declining profits and market share. Just 30 years ago Sony was the pioneer with the Walkman and the Trinitron. It’s a fast-moving and ever-changing consumer electronic industry. Additionally, consumers have become accustomed to low prices, something that Samsung delivered on – quality at a value price.

    There is a bigger lesson in all this. Less than 50 years ago, there were multiple American electronics manufacturers, such as RCA, Zenith and Mangavox. They only exist in name and are largely owned or are subsidiaries of larger multi-nationals based outside the United States. The PC industry is currently experiencing a similar upheaval as stalwarts such as HP and Dell get undercut by Asian companies such as Lenovo, Acer and Asus. Scale and volume is needed for razor thin margins. Only the large and vertically integrated survive.

  • solomon sunder

    Most customers do perform a research on the Hardware configurations of Android phones even if they would not do it for non-Android phones. Samsung keeps its prices the lowest in a specific hardware range. In India the Galaxy S2 is the lowest cost Android phone with 8/1.3 mp camera, 16 GB memory, 1 GB RAM, 1.2 Ghz dual core processor, 4.3” screen for Rs 25990. Next is Galaxy S Advance/ Galaxy R with 5/1.3 mp camera, 16 GB memory, 768 MB RAM, 1 Ghz dual core processor, 4” screen for Rs 19500. Motorola Atrix 2 is usually compared with Galaxy S Advance because of not having enough internal memory, native 3g video calling(not video-chat). Most other phones with similar configurations are priced much higher. This should probably be the reason Samsung sells more Android phones.

  • http://www.facebook.com/darkrage1985 Stelios Tzouvaras

    > How much it cost to transform Android into a iPhone clone

    Your statement is an epic fail…. Android is nothing like IOS.

  • Stanley Watson

    Wow – you nailed it bru. I am copying your response and putting it on Google Drive for future reference.

  • http://twitter.com/snookasnoo Idon’t Know

    You took a long time to say nothing that makes sense.
    Samsung is the one one making money. That makes them the only Android success story. Profit = success.
    Google is selling the Nexus 7 at cost as they have admitted. Which besides being just pathetic also means Asus is making minimal profit from the Nexus 7.
    Then you go on to talk about how a lot of people really like Android. Which means nothing if the companies making Android devices are losing money and Google makes more from Google services on iPhones and iPads than on Android devices.
    This is not a sustainable business model except for google which can keep throwing money at it because of their search revenues.

  • http://twitter.com/snookasnoo Idon’t Know

    Thats not going to stop them from losing money for years.

  • http://twitter.com/snookasnoo Idon’t Know

    Good thing thats not what he said then.

  • http://twitter.com/snookasnoo Idon’t Know

    Motorola sells outside the U.S. market. Duh.

  • http://twitter.com/snookasnoo Idon’t Know

    Now everyone knows Samsung copied Apple. Not great for their reputation.

  • http://twitter.com/snookasnoo Idon’t Know

    Only kids say epic fail.
    You know nothing about iOS or Android.

  • Rex_D

    It doesn’t seem to have to do anything with Android, but to the decisions and practices by each manufacturer. HTC and Motorola were at one point much more desirable than Samsung in the phone market (at least in the US). Both companies mistakes in regards to timing, design, updates, and skin-overlays over the past couple of years, in addition the amount of money they have wasted creating phone after phone after phone = failure. HTC and Motorola have created too many phones, with a large portion of them being a failure. Meaning the over-all impression of Motorola and HTC is that they are not a safe bet, that your chances of either getting a crappy phone or getting shafted somehow (updates) are high. Samsung has less phone releases that come to mind, and significantly less failures that people can dwell on. Their reputation is better.

  • Lucas

    Don’t be that fool, Android is the best thing that happened to them, including Google that has just become the second more valuable company in the world. Without Android OEMs wouldn’t be even competing decently, take Nokia and BlackBerry as examples. And about Android being a copy, NO, it’s just an answer. What did you expect, Apple to create a new successful concept and no one else being able to implement it? Imagine if after the first thin LCD TV no one else but the first company to market it could make thinner TVs, without being called a copy, come on, should all other companies keep building tube TVs? I really try not to be rude at comments, but seriously, how can you still think like that? Apple’s iPhone was a revolution, period. But then, competitors should sit and watch they build a monopoly? Samsung success has nothing to do with copying, they simply were quicker to understand what market was expecting after the iPhone boom: a few but good devices, a more unified experience across their many devices and services, giving regular upgrades to the high end devices, etc. Sony is just now becoming more unified after buying Ericsson’s share and organizing itself, Motorola has just been bought by Google and is beginning to have some focus, LG and HTC seem to be following Samsung’s steps to unification and building less but good devices. Please, if you see the world in such a limited way, you should not write about this because you seem to have no idea if what is really happening. Or try to open up your mind. I really hope you do.

  • Lucas

    PS: you are writing about mobile and your web site doesn’t even have a decent mobile experience. Try to comment using a smartphone: get the Facebook bar on bottom of the screen that never hides plus the size of the keyboard and there’s almost no more space left on the screen. It may be Disqus fault, but even so, what a bad experience! I had to write on another app, copy and paste here, really terrible.

  • http://www.staska.net Staska

    Sorry about that. Brian has nothing to do with it, it’s my site. So it’s my fault, well and Facebook’s and whatever coding magic they do to make that bar to show up. And definitely not Disqus fault – they too have nothing to do with it.

    I hoped that those bars won’t show up on mobile version of the site – but they do. I tried Slide, now Facebook – and its the same. If you know some tool to do relevant article recommendation pop-ups (free or paid) better – I’m all ears.

    But for now – mobile traffic makes less then 20% of site traffic. Commenters from mobile – do less than 1% of that. And that bar is a pretty effective thing on the desktop.

    I’m sorry there’s some inconvenience here. I know its the trade-off. But its the best I can do for now

  • Lucas Laurindo dos Santos

    Thanks for the reply and sorry for being rude, I found the article itself a little offensive for Android supporters.

    I believe that, unless you write for a site/blog that makes it clear it’s devoted to some idea, brand, etc (i.e. Cult of Mac, Android and Me, WP Central, OMG! Ubuntu!), you have to keep some impartiality and not talk about what you think, believe or guess as “truth”.

    The statement “transform Android into a iPhone clone” takes the author opinion as truth, and offends a lot of people. Saying you see it as a copy is far different of saying IT IS. The rest of the article shows everything from one only perspective, ignoring the scenario before the Open Handset Alliance, ignoring what happened to device makers that refused to join the OHA, and spreading the idea that Apple owns the entire concept of the modern Smartphone (which is questionable by itself, since concepts and ideas can’t be owned), an idea that, again, is a too subjective matter to be said as a “fact” and the author insists to promote as truth.

    Anyway, sorry if I was offensive, and I hope my opinion can help you and the author to improve by making it clear when statements are opinions or facts.

    PS: If I notice some way to take that Facebook bar off on mobile I’ll be happy to send you a reply. But for now, can’t you simply identify when it’s on mobile view and put an “if” in the inclusion of the Facebook bar or put the code into a Span or Div and set ‘display:none’ via Javascript?

  • http://www.staska.net Staska

    #1 Opinions vs facts – this whole article is an opinion piece, not a news post. So everything in it, unless stated as hard fact with numbers or quotes or smth else to back up, is an opinion. My bad, design shortfall again, there’s no way to see it clearly when you arrive here. I intend to correct it as soon as I can afford it.

    I’m just starting with op-eds, and I do pick my authors for their strong opinions. And Brian is pretty moderate here. You should check Brian’s own blog to see what he says when he’s not pulling his punches :) http://brianshall.com/

    #2 Having said that – I do fully agree with Brian in saying “How much it cost to transform Android into a iPhone clone rather than a Blackberry clone…”

    Just look at the first Android, OHA prototypes and say Nokia didn’t pivot sharply to transform Android from BB lookalike into iPhone lookalike. See a video here: http://www.unwiredview.com/2010/12/29/how-google-android-thanks-to-apples-iphone-took-over-mobile-world-in-2010/

    It’s a fact – they did. It’s not wrong, it’s not illegal. Though Eric Schmidt sitting on Apple’s board at the time does raise my eyebrows. But overall, I think it’s actually a good thing, just as MSFT getting inspired by Mac was. it’s what makes the progress, and it happens everywhere. But it is a fact, Google did it.

    #3 Getting back to Samsung and the fact that it deliberately made their first Galaxies look like iPhone. It is a fact again, proven in the court of law already (unless overturned on appeal). Motorola didn’t make its first Droid to look so close to iPhone, neither did HTC with Nexus One or Desire/Incredible/EVO. Samsung did. Just look at first Galaxy S and iPhone 3GS. Oh, and, how the heck did those corners got much more sharp and overall look of Galaxy S2 so much square, just as iPhone became so much square too? Happy coincidence? I think not.

    Samsung deliberately went after iPhone’s look&feel as much as they thought they can get away with. Unfortunately they miscalculated. Samsung is the only company Apple went against with design patent and trade dress infringement claims and Apple is winning heavily at the moment. For a good reason.

    Because Samsung deliberately tried to make its smartphones to look and feel as close to iPhone as they thought they can get away with. This is most definitely not someone else taking the revolutionary idea and building on it. This was a blatant attempt to profit by making as close an iPhone copy as you think you can get away with.

    So hopefully Samsung will have to give back some of the gains from that decision. Not that it matters to them or Apple in the long run.

    #3 Do I think patent system is fucked up? Sure. Do I think that some of the utility patents Apple or Microsoft are using against HTC, Motorola and Samsung are a load of crap? Certainly. But I don’t really care. They are the big boys with millions to burn on this stupid shit and they will eventually arrive at some sort of settlement and figure out who owes how much. Providing some serious entertainment and look behind the scenes for the rest of us.

    What I’m really worried about, what really pisses me off, are patent trolls like Lodsys. Who is already collecting a patent protection money from 150 app developers who can not afford the patent lawsuits. And there probably will be a lot more of them soon. I hope patent system gets reformed for the sake of them.

    Re:PS. I would if I could. Unfortunately it’s a WordPress plugin, so it’ll mean I have to go deep into the code to figure out where to put that “if”. And with my barely existent coding knowledge I wouldn’t know where to start, or try it if I knew :)

    And NP, I sometimes get angry and carried away by something I think as a stupid shit, too :)

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    I just checked this on my iPhone and it was easy to click the box to dismiss the Facebook links. As for my opinion, well, it’s based on facts. Google has lost a fortune on Android. LG and Sony. Now HTC is stumbling. Even pre-Google, Motorola was losing money. Those are facts.

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    What are you talking about?
    You say that — eventually — Motorola will earn money. Sony will earn money. LG will earn money. HTC will earn money using Android. They are losing money now. Samsung has been found my court(s) of law to have copied Apple. I’m throwing that out as one possible reason why they are just about the only company making money off Android. If you have other reasons, do tell. But a defense of…these companies will make money in the future is weak.

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    A bunch of square apps from an app store using a full touchscreen phone that combines media player, phone and portable web device. Yep…nothing at all like iPhone! Get real.

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    I don’t know if this is right — I suppose it will be proven. But, if it is correct, than Samsung will soon have significant sway over the entire Android ecosystem. Possibly the equal of Google, I suspect.

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    “You took a long time to say nothing that makes sense.”
    That is the most awesome thing I’ve heard all year! I have to steal that line.

  • cyanogenmod

    I know the codes even sources both from android & your crappy darwin apple..
    But I was taking 2 thumbs up for fan boys.. u’re all most patience & loyalty slaves for just bit step long time ‘innovation.. & we didn’t like u, we can’t wait the communities for any changes forward just for a day… Congrats just stuck like that was very good for u.. mama’s boyz.. lol.

  • JDSoCal

    LOL, “offensive to Android supporters.” What does that even mean? I’m an Apple “supporter” because I am long the stock. I assume you are not long GOOG (and even if you were, you might be asking as a shareholder how the hell Google is going to monetize Android), so why would you have some sort of emotional fetish for Android? Offensive? Like saying an anti-Semitic remark to a Jewish person?

    Get a grip, man. It’s an OS, not a religion. And Google’s Android development team doesn’t give a damn about you. Why do you care?

  • JDSoCal

    Brian, I have noticed the same irrational, rigid, dogmatic thinking among Fandroids as with liberals. One very similar trait is they really exaggerate the popularity of their worldview. Newsflash for Fandroids: Nobody gives a damn about openness or developers or what geeks think. They just want a cool, functional phone that has a good ecosystem.

  • JDSoCal

    I’m 45 and I say “epic fail,” FYI.

  • JDSoCal

    Lucas, newsflash: Google is a publicly-traded company whose main purpose is to make shareholders money. So far, Android and MMI have not done that. Causing dopamine to be released into geeks’ heads by pretending (hint: Android is not really open) to support their open-source religion is irrelevant.

    If I were a GOOG shareholder, I’d be really furious at their ineptitude WRT monetizing mobile. But I am not a shareholder, and you apparently aren’t, SO WHY DO YOU CARE?

  • Brandon Wann

    Want too hear a story about marketing? Okay I see two phones…Apple and Android, first one I pick up is the one I go with. I just picked up Android. End of story. User preference? No. Marketing? Nah. They both are ‘phones’ so making calls and that there new aged texting is what I get. Cool. So why Android? Simple; It was the first phones I picked up.

    And that experience accounts for those who don’t act on informed choices, whether they go iphone android or even make up their own device. Anyone learn anything? Now, you all may continue your light sabre battles.

  • TheEternalEmperor

    That just makes you an old kid.

  • steven75

    You make it sound as if conservatives don’t have the same “irrational, rigid, dogmatic” thinking. I assure you, they most certainly do. “Your” party is not any less prone to this than the “other” party.

  • Sérgio Carvalho

    Android was a strategic move by Google to protect its cash cow (search) from an Apple monopoly on mobile browsing. It was of such brilliance that most people reason like you do and fail to grasp its greatness. Do you also think google funded mozilla (firefox) out of generosity? Or do you think they plan to directky monetize firefox someday?

  • http://www.facebook.com/darkrage1985 Stelios Tzouvaras

    Hey smart guy go to my fb profile and see about my job. After that come back and let me know if I know about the android platform.

  • http://twitter.com/MarionCast MarionCast

    But not at the same scale of marketing and promotion as in the US. Duh.

  • symbolset

    No doubt Samsung would like this to remain their little secret. It is no secret though. There is an ongoing struggle between the interests of end users, retailers, carriers, phone brands, component manufacturers, mobile OS vendors, app developers and even shippers. To win requires Ninja-like abilities to traverse a minefield blindfolded, dodging arrows and laser sensors, silently, against a learning AI as advanced as Deep Blue. It’s really, really hard and you have to evolve your strategy as you go because a fixed strategy demands the invention of an effective counter strategy.

    As others have said, Samsung hits all the right marks – best of breed for the premium market, best value for money for the midrange, best price for minimum features on the low end. In all of these by delivering an outstanding experience they build a brand premium people will pay more for – and they don’t over or under value their brand premium. In all these they also offer enough feature choice to fill up a retailer’s shelf and let customers choose their brand no matter what the desired carrier and feature set is.

    Others squander their brand premium for pride, to put too much spin on Android, or for cash to put too much crudware on – or not enough to compete with others who do. Some, having failed to build brand value have little leverage with carriers to avoid toxic features, like Verizon’s Bing integration on Android phones, which then costs them ad spend to get new customers to replace those that cost them. Or they can’t command lower carrier margins or co-marketing dollars.

    And then there is economy of scale. iPhone’s supply chain is the envy of the world, and it moves half of Samsung’s volume. So Samsung’s mobile division has roughly twice the traction with their parts division and other suppliers and assemblers and retailers and carriers than even Apple has. They can tie up the world’s supply of thing and abilities even better than Apple can.

    Add all that together and the question becomes “well why isn’t Samsung beating Apple’s margins?” Maybe eventually they will. But first they are going to build more brand value and get their handsets in more people’s pockets. It’s a long term strategy thing.

    The answer to your question is that somewhere in the bowels of Samsung is a tactical genius, and for now at least they trust him enough to let him win. I’d love to meet whoever it is.

  • symbolset

    Moto Mobile is now under new management. Give them an little while to reorient.

  • symbolset

    This is not how either Samsung or Android works. Android is and will ever be a level field. If Google could be tempted to tilt it, Nokia’s offer would have done it. Samsung’s happy to play on this field, confident enough in their ability to best the other team.

    But of course Samsung is really big, and has enough players to play in other leagues too, even where the field is not level.

  • symbolset

    Something has gone wrong at HTC. Too early to tell, but maybe they fired their genius or somehow lost faith in him.

  • symbolset

    Try a different browser. I’m not having any trouble dismissing that box on any of the 3 browsers installed on the phone I wrote this with.

  • http://www.facebook.com/msantaka Mochammad Santaka

    That is a weird question to ask.

    Unless Samsung has an unfair advantage with the Android platform, which they don’t and which your article does not point in that direction, that is a very weird question.

    They manufacture a lot of the component themselves, they make great phones, gets a software update regularly with descent pricing.

    Obviously it is a question of product quality and marketing power.

    Maybe it would be better if you ask “Why Samsung is so successful?”

  • warcaster

    “We do know they are meager”

    Do we? At least show a link with proof if you’re going to say that. Here let me show you how it’s done:

    Google’s Mobile Run Rate Is Now $8 Billion, Up From $2.5 Billion A Year Ago
    http://techcrunch.com/2012/10/18/googles-mobile-run-rate-is-now-8-billion-up-from-2-5-billion-a-year-ago/

    That increase must’ve come from Android, as iOS devices didn’t grow 3x in a year. Android devices did.