Can Samsung retain its Championship in the smartphone market?

The world has witnessed tremendous growth in the field of mobile technology in the last five years or so. These years may have very well written and rewritten the rules of the mobile industry for the foreseeable future. While five years may appear too short for such a dramatic change, it is not an exaggeration in the case of mobile industry, where a lot could happen even in the span of one year. Market positions of the mobile manufacturers changed at rapid pace without giving them breathing space to fathom what’s happening. Many famous companies vanished into oblivion; few companies got acquired in the fire sale; some companies on the verge of extinction; new companies grew at exponential rate, and all of this happened while two companies, Apple and Samsung, almost hijacked the mobile industry’s profits through global dominance.

Samsung, in particular, has grown at an astonishing rate in becoming the world’s largest phone manufacturer – a position it snatched away from Nokia. In 2013 alone, Samsung sold 100 million+ Galaxy S and Note devices – an astonishing sales figure even after excluding the other boatload of low-cost phones sold by the company. With unparalleled vertical integration, Samsung not only makes millions of smartphones, it even manufactures majority of the phone components like processors, display panels, storage solutions etc. Samsung is not only the world’s largest manufacturer of smartphones, it’s also one of the largest supplier of many phone components.

However, it’s not just the factors within that have transformed Samsung into a giant. Major competitors like Nokia, Blackberry, Sony Ericsson, and Motorola were involved in major business transitions, which were necessitated either by the ecosystem driven smartphone market, or by the unexpected onslaught of Samsung and Apple smartphones capitalizing the ecosystem driven smartphone trends. The most dramatic of these business transitions should be awarded to Nokia, for its quick decline from being the world’s largest manufacturer of mobile phones to the point of being acquired by Microsoft for a tiny fraction of the price it once commanded. In hindsight, it’s easy for anyone to say that, Nokia’s reluctance to adopt the Android ecosystem is the main reason for its decline from dominance to a period of irrelevance. But, Nokia’s reasoning that Samsung, with its strong vertical integration, will dominate and commoditize the Android market definitely had some merit to it, even before Samsung’s rise to dominance. To Nokia’s credit, their narrative behind the unwillingness to jump into Android ecosystem proved right, but what went terribly wrong is their faith in Windows Phone ecosystem as a viable alternative to Android. Had Nokia gone Android, Samsung’s growth would have been surely challenged.

The story of Motorola is no less dramatic from being the maker of world’s first mobile phone to acquisition by Google. Motorola had strong presence in American markets, but the launch of iPhone severely hurt the business for Motorola. The problems for Motorola were compounded with the strong push by Samsung to capture the US market. Motorola, like many others, couldn’t counter the billions worth of marketing spend by Samsung, and eventually got acquired by Google to tackle growing financial troubles. Even Sony Ericsson’s transition to Sony by acquiring the Ericsson’s stake in the joint venture, is characterized by similar troubles from Apple’s iPhone and Samsung smartphones. To Sony Ericsson’s discredit, initially they under estimated the impact of both the iPhone and the ecosystem driven smartphones. When they did realize the need to adopt Android ecosystem, Samsung had already started exerting their dominance by bringing the latest hardware and software to the market, something which Sony Ericsson Xperia phones failed to do. Sony realized the need to gain more control over its smartphone division, and acquired the stake owned by Ericsson, but not before providing a little window period of almost no competition to Samsung.

The scenario with Blackberry is slightly different. Currently, Blackberry is in neck-deep of troubles, and is facing a possible threat of bankruptcy. From the commoner perspective, the physical qwerty keyboard smartphones from Blackberry were handsomely outsmarted by the plethora of touch based phones running Android and IOS. So, once the Android and IOS ecosystems started growing, the BB OS 7 running Keyboard based Blackberry line up faltered heavily in the consumer market. Sensing the need to jump into the touch and ecosystem bandwagon, Blackberry launched the BB OS 10, a heavily gesture based OS optimized for touch screen phones. Launched in early 2013, BB OS 10 continues to face the daunting task of competing against the more matured and popular ecosystems like Android and IOS. So far, the results have been terrible for Blackberry, and the chances of bankruptcy and fire sale acquisition looms large in 2014. HTC, on the other hand, performed exceptionally well during the initial days of Android, but failing to compete with the marketing blitzkrieg of Samsung smartphones, has pushed itself into the territory of financial troubles in the past year or so. Even HTC went through fair bit of business restructuring, which involved acquiring stake in Beats Audio and dislodging it with the advent of financial troubles. Unlike Blackberry, however, HTC has a much better chance of survival and regaining past glory.

Major competitors like Nokia, Blackberry, Sony Ericsson, and Motorola involving in major business transitions like acquisitions, adopting or developing a new OS platform, dissolving joint ventures to regain control etc, resulted in mediocre phones from these companies. These phones couldn’t stand the onslaught of billions worth of advertising by Samsung. All these business transitions resulted in loss of valuable time and resources, which otherwise would have probably went straight into launching better products and running better marketing campaigns. So, even though Samsung products were not substantially better than the competition, the sales were exponentially more than the competitors. It is in the light of these developments, one can say competitors played their part in helping Samsung to dominate.

It is possible for someone to make an argument that such business transitions are common and thus cannot be held responsible for the growth of Samsung. Undeniably, this argument has some merit to it for giving Samsung the credit it deserves. But, except HTC, the rest of the transitions quoted here are no ordinary business decisions. These are transitions which resulted in the birth, death, and rebirth of global heavyweights in the industry. What makes these events even more dramatic is the enormity and close timing of these transitions. These transitions drastically impact the modus operandi of the involved companies for the foreseeable future. It is worth reiterating here once more that, the intent here is not to discredit Samsung for the amount of incredible work it has done to reach this dominant position, but to point to the fact that Samsung’s efforts were not challenged effectively by the competitors involved in these major transitions.

Thankfully, by the end of 2013, the market is more consolidated, and the competitive landscape is more robust than in the past. Excluding BlackBerry and HTC to an extent, there are no major financially feeble companies in the market, and that’s a sign of healthy competition to come. Now that most of the competitors put their house in order, and are better geared to fight, can Samsung retain the championship in 2014? If the past is any indication, one year is a lot of time in the mobile industry, and many unexpected large-scale events can happen. So, it’s not an absurd thought to question if Samsung’s dominance in mobile space will reduce or begin to end. Most of the competitors, except Blackberry, have already launched smartphones in 2013 which made life a little more difficult for Samsung flagship phones compared to the predecessors. In fact, some of these phones have lured away customers from Samsung, and there is an air of anticipation for the successors to these products in 2014. If the past trends are analysed, all that a mobile company needs is one successful model to build an entire line up in the form of successors, minis, and other variants.

So, has the competition launched any such smartphones in 2013? Can the competitors really challenge Samsung smartphones in 2014? Stay tuned to our portal for the upcoming series of qualitative analysis of the major competitors, to seek answers to these tantalizing questions, and let us know your thoughts and opinion on the matter in the comments!

This article was written by our guest blogger, Naresh Nekkanti (you can follow him at @nekkantinaresh on Twitter), and will be part one of a multi-part series of articles analyzing Samsung’s challenges in 2014, and its stand among the competition.

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3 years 1 month ago

LG is getting better and better….

3 years 3 months ago

Samsung is a great company in Techno field. I am also using it’s many products, like mobile, Television and Sound system. I am satisfied with it.

3 years 3 months ago

As long as their smartphones doesn’t include useless features, aka bloat-ware!

Anyway Samsung shall remain as top mobile phone maker! :)

3 years 3 months ago

okay now the real words if samsung can get back or not ?
forget about the note 3 and s4 okay and lets speak about the upcoming phones like the s5 and note 4
1- if the s5 and note 4 doesn’t come with flexible display or two side curve as they claim then they will not get back as they were.
2- if they refuse to make metal case then they wont sell more.
3- if the touchwiz doesn’t upgrade as they claim then they will not

at least that what i think if you want to add more reply to me :)

3 years 3 months ago

Samsung will start heading down as it continues to lock up the phones with the restrictions, the Note 3 will be my last Samsung product.

3 years 3 months ago

Unfortunally now I dont think so. They have made already some bad moves like knox with just their will and still with 2gb ram and snapdragon cpu galaxy’s has lags.Also too much bloatware.Already samsung lost ground in yhe percent of smartphone selling in Usa by apple and by Xiaomi in China.If they keep continue so pride with a mind of they feel so sure for their world smartphone’s rating, sammy ll fail more. This annoying moves by one device with 5 versions 6 or 7 its more than hatred. I regret that I gave my Note 2 and took this GT I9505 laggy S4…And cant buy the I9500 cause they dont bring it in my countrie.Epic annoying strategy

3 years 3 months ago

There is no future for a toymaker. A toymaker only makes nice new toys, but what about customer care, especially updates/grades. There is a huge difference between beeing a toymaker or a phonemaker.Which one is Samsung? Announcing a neat new toy or an upgrade for already sold devices?

3 years 3 months ago

The idea of being able to trade in an old phone as a part of an upgrade program requires the overhead of processing old phones so they can be sold again. Since Samsung doesn’t make as much profit per unit as Apple, expecting them to provide that service makes very little sense overall.

Now, Samsung has been offering updates for phones, the S3 went from 4.0 to 4.1 to 4.3 for example, and the rumor is 4.4 will also be released. So I don’t see that as an issue. A big part of the issue is that if you need .95 GB of RAM when idle, then you need 1.5-2 GB of RAM or more for that version of the OS is going to work on phones. That means that SOME(not all) versions of the S3 could handle it, but not others. It also means that older phones just couldn’t get the update due to limited amounts of RAM.

Being able to upgrade hardware is the third way that people MIGHT be able to upgrade, except that the whole process of miniaturization means that it becomes more difficult to allow consumers to just swap in parts here and there. Want the phone to be water resistant so it won’t be destroyed if it rains? It needs to close up properly, and most people won’t be able to do the job properly. Again, it comes down to how expensive it would be to upgrade compared to the cost of a new device.

So, if you think it is so easy to run a business and keep it profitable while providing upgrades/updates, then you should try it yourself. Samsung may make a lot of money, but look at how much goes back into research and development. TouchWiz needs to be updated, so we are not looking at vanilla Android as provided by Google. Samsung also is the most innovative company out there, throwing in features many feel are useless, but that is the process of innovation, throwing around a lot of ideas. Software development isn’t cheap.

3 years 3 months ago

You’re right that software development isn’t cheap. But you forget that Samsung has a LOT of room for improvement. For starters, you’re forgetting that it took Samsung more than a YEAR to update from 4.1.2 to 4.3 on GS3. And even though they had so much time to make it perfect, they created a disaster when 4.3 first came out. Now it’s fixed, but even now it’s not done rolling out (middle east hasn’t even started), and it’s been almost two months now! Look at apple: they make ONE update for ONE world, and roll it out to everyone. Samsung? They need the MK6, BUUG, MK7, all these different wacko firmware versions for each country, because they can’t simply enter language and APN settings for the whole world in one version.

And why make different chipsets internationally from the US? They just ended up misleading people with their countless ads: people in the US thought they’d get quad core, and people internationally thought they’d get LTE and 2gigs RAM. Well, until they released a new unexpected LTE i9305 only half a year later…

Try to also see Samsung’s “innovative” software policies toward development. Exynos 4 source has never been properly documented, and that’s why the development community dislikes Samsung. This gives them trouble making tweaks and improvements to the GS3, because sure Samsung can’t keep updating their phones forever, but some power users wouldn’t mind taking that matter into their own hands. Other phone companies like HTC and Sony have been doing a much better job with this regard.

And I don’t know what you mean about RAM limiting the updates. If you didn’t know, 4.4 android is compatible with 512 mb RAM phones, that’s one of the main highlights of the update. GS3 is a powerful phone with either 1 or 2 GB RAM that can handle android updates for at least the next few years.

3 years 3 months ago

What about their premium line device Note 10.1 (2012) which was market for business and schools?

A one upgrade from Android 4.0 to 4.1. A year ago. Probably they forgot that “premium class device”. No support for their Gear for example. It’s not even compatible with latest Notes.

Really? There is no room for Samsung in schools/business.

3 years 3 months ago

You do realize this is a business right? No one is forcing anyone to buy each new smartphone that comes out. Samsung sells NEW smartphones to make a profit, so it would be idiotic to sell a device that lasts for years and is still “cutting edge”.
Upgrading improving each of their flagships every year doesn´t make it a “toymaker”.
We get updates for the products and as far as I know Samsung products have a warranty.
I don´t understand the hate towards a company making money….

3 years 3 months ago

A toymaker is only capable of making toys. That’s it. Why Apple is so good? It has loyal customer because people can trust Apple.

Have you heard any business or schools using their premium line flagship, Note devices? Probably not, and wont hear. Nobody wants to buy toys that are thrown away because lack of customer care.

When windows based tablets are better – Samsung will sink.

3 years 3 months ago

You forgot one another reason and the most important, for Samsung becoming the giant is the “Customers”. But even this “GIANT” still has a lot to learn. Its not only the customers in US and KOREA use this phone. There are millions of customers across the world were using their phone. So they should stop the partiality of release different versions for different regions. If they are releasing Snapdragon and the (SHIT) Exynos version, they should release both all over the world. I hope this might happen in future. I am not going to buy another Exynos version again.

3 years 3 months ago

Good point. On another hand, I’m not buying a Samsung product ever again. I’ve had enough with their ignorance.

3 years 3 months ago

@Psicho don’t let the door hit you on the way out.

3 years 3 months ago

The difference is that for the LTE versions, the Snapdragon processors are being used. That may change in the future, but it really is the primary issue, LTE support.

3 years 3 months ago

It just like I have always said it’s Plain and simple nothing beats Samsung period.