This year has brought some good news for Samsung as the company saw its profits rise after seven quarters. However, an analyst thinks that the South Korean smartphone giant may exit the smartphone business in the next five years. According to Ben Bajarin, an industry analyst, Samsung is grappling with “The Innovators Dilemma“, and he wouldn’t be surprised if the company left the smartphone market in the next few years.
The analyst claims “When you ship the same operating system as your competition you are only as good as their lowest price.” An Innovators Dilemma refers to a situation where early innovators are challenged by new competitors who offer good enough products at a much affordable price. When the market starts accepting good enough products, early innovators fail to justify the premium price tag of their products.
“There is absolutely nothing they can do to fix the downturn in their premium handsets. No amount of innovation will save them because the “good enough” mindset has settled into Android land,” writes Bajarin. Another point he makes is that low-cost good enough smartphones were supposed to hit Apple, but it hit back Samsung as it used Android, which is used by other low-cost smartphone manufacturers, on its devices.
“Android’s new premium price point is between $300-$400 and the new mainstream Android smartphone price point is under $300. No other Android OEM, Samsung included, will sell in volume anything above those prices. At those prices, cutting edge innovation will be void, meaning the gap between iPhones and Android will grow,” he further writes.
This analysis, or we could rather say, prediction would seem quite outrageous right now, but we’ve seen that happen with Nokia. Some popular brands like BlackBerry and Sony are failing to revive their smartphone business right now. However, we know Samsung has a lot of other business, and it doesn’t depend on the smartphone business to survive. It is a force to reckon with in the display panel and semiconductor markets.
We would like to know what the community thinks about this prediction. Is the company’s failure in the smartphone business inevitable? What do you think? Do you think Samsung could be nearly as profitable as Apple in the smartphone business with the future Galaxy S devices? Let us know your thoughts in the comments section below.