Samsung walks the Nokia path. I wonder where does it lead?
There is this huge industry giant, let’s call it “X”, that dominates smartphone/mobile device market. And collects almost half of all industry profits. Billions and billions of dollars a year.
Every year they come out with a new flagship device, each one more successful than previous one. This flagship very quickly becomes one of the most popular mobile handsets that year, with very few other vendors capable of producing a device to match or exceed it in unit sales volume.
But while the flagships are extremely profitable, this mobile giant is no one trick pony. It actually produces mobile devices at every price point, in every popular form factor.
And does so profitably. In fact, its financial resources, logistics, supply, manufacturing and distribution is of such a scale, that only small regional upstarts with pre-baked device designs from Schenzen China are able to compete with it. But only locally, and barely. They have no close competitor on Global scale.
Sometimes X misses a hot new trend, and smaller competitor releases a device that becomes a big hit. That doesn’t bother the X in the least. They simply muster their manufacturing and logistics base, and quickly come up with an answer, copying the most important features of the hot gadget. Then it start replicating that successful design up and down the price tiers, adding better spec’d more expensive stuff, removing features or using cheaper components to produce cheaper variations, etc; And floods the market with a plethora of models for every taste. In a few quarters it’s X, who is the biggest player in the hot new category.
Speaking about the number of models X is able to churn out each year. It’s simply mindboggling. Even the most ardent fans can not easily name even half of them.
X is also not afraid to take risks. Sometimes these risky products are complete duds, but sometimes they can create, define and then dominate new category for years.
And X has a very good idea where the mobile industry is headed. They can see the ever increasing importance good software/platforms and online services will have on their business. X has already made getting good at software and creating world class online services one of strategic goals for the whole company.
Few years ago, X also got the first taste of what having a winning software platform might mean for business. But they didn’t own that smartphone platform, which was made and owned by another company, and available on the same terms to everyone else. They then tried to get into mobile software platform game themselves, by creating mobile OS of their own. Complete with its own app store and and SDK.
While busy trying to make their first platform a success, X also had an open source project with Intel as a partner, to create the future proof next generation mobile platform. They talked about the new platform and its bright future a lot. Promised all developers app compatibility between the old platform and the new. And yet, didn’t release mass market/consumer ready product for years.
And, X embarked on software/online service company buying spree. Gobbling up numbers of promising start-ups, with quite a few very interesting and useful features making it to their phones. But never resulting in a coherent integrated offering, always described by reviewers along the lines of “hodge podge of software features and services randomly thrown together”.
Care to guess which company I am talking about?
Nope. I was talking about Nokia in 2003-2009. But it could have as easily been Samsung:
|dominated mobile industry, owning 30%+ of the mobile phone and 70-30% of smartphone market||dominates smartphone industry with almost 30% market share, and 40% share of Android|
|had 50%+ industry profit share in 2007||had 34% of smartphone and over 90% of Android profit share in 2012|
|was several times the size of its closer competitor,||is several times the size of its closer Android competitor. By estimated unit volume – now about twice the size of Apple|
|with unmatched mobile phone logistics, manufacturing and distribution scale||with unmatched mobile device logistics, manufacturing and distribution scale.|
|successfully defended against first generation cheap Shenzen phone attacks. Even in China||successfully defends against first Shenzen smartphone attacks in China, India and everywhere else.|
|successfully recovered after missing a major trend – clamshells, color display phones, RAZR like thin devices, QWERTY smartphones||successfully recovered after being somewhat late to modern smartphones/Android/tablets, beat HTC to become dominant OEM, then proceed to beat Apple in smartphone market share, may soon start closing in on tablets|
|created or pioneered new device categories – cameraphones, smartphones, communicators||created and still dominates phablet category|
|had quite a few flops, e.g. ‘N-Gage||had quite a few flops, e.g. Bada, original Galaxy Tab|
|had a mindboggling amount of new models every year||has a mindboggling amount of new models every year|
|clearly saw the trend towards mobile computing – N-Series, E-Series “multimedia computers”, communicators||clearly sees and rides the trend towards mobile computing. On Android|
|ruled the smartphone with software platform owned by another company – Symbian Ltd. Which licensed the same platform to Motorola, Sony Ericsson and others||rules the smartphones with software platform owned by another company – Google’s Android|
|had its own app store– Nokia Download, OVI store, proprietary S60 SDK, etc;||had its own app store and SDK for Bada, now its own app store on Galaxy phones|
|bought Symbian, tried to make it their own and failed, killing alternative UIs/SDKs, preferencing own needs and devices. Failed||created its own Bada platform, which failed to catch up and was abandoned|
|started an open source Maemo project to create next generation mobile computing platform, later merged with Intel’s Mobilin and renamed Meego||started an open source Tizen project to create next generation mobile computing platform, with Intel as a partner|
|promised transition/compatibility for Symbian app developers via Qt||promises transition/compatibility between Bada apps and Tizen|
|1 consumer/mass market ready Maemo/Meego device after 6 years of development||2 years and counting since Tizen announcement. No commercial products yet|
|went on a buying spree between 2006 and 2010, acquiring 17 startups/software/service companies to build-up its software/online service offerings, spending close to $10 billion in the process||in the midst of the buying spree, to build-up its TouchWiz/S-whatver offerings. Ready to spend billions|
|tried to unify its software/services under OVI brand. Failed to create an integrated, consumer friendly product. Constantly bashed by fans and foes alike for lack of integration and consistency.||from Walt Mossberg’s Galaxy S4 review: “I found Samsung’s software often gimmicky, duplicative of standard Android apps, or, in some cases, only intermittently functional.”|
Like with all such comparisons, this one is not exact, deliberately overlooks some differences and artificially enhances some of the similarities. And, of course, history doesn’t really repeat itself.
More importantly, Samsung has a couple of things going for it, that Nokia didn’t: Apple – to keep it on its toes and act as a “source of inspiration”, and Google – to prod it in the right direction.
Still, taken together, all those similarities above, are uncanny. Especially the foray into the software and services.
Except for a few American companies with software/online services in their DNA, nobody has yet created a globally successful consumer/mass market software platform during the last 30 years of personal computing revolution. Even though countless tried.
As for the hardware vendor successfully transitioning to where Samsung wants to go? If anyone can do it – its them. But only if it is possible at all