Jenkins: Samsung's strategy different to its main rival, Apple
The South Korean company has a phone to suit pretty much every potential customer
But Samsung's scale could turn out to be a weakness as well as a strength, says Jenkins
"In some respects, Samsung reminds me of Sony in the years before it all went wrong"
This summer, Earls Court in London will be the venue for Olympic volleyball, but last night Samsung hired this vast space to launch a single product – its new flagship phone, the Galaxy S III. (We really liked it incidentally, check out our hands-on preview here).
Hiring such a large space and filling it full of tech heads from all over the world was a sign of extreme confidence from the Korean electronics giant, and you only have to take a look at its last set of figures to see where the bravado is coming from. Net profit for the quarter was 5.05tn won, up 81%, and the main driver for this success was Samsung’s Galaxy range of phones.
The Galaxy range has certainly been selling like hot cakes. This week, trend-watchers IDC put the company ahead of the competition in its latest state of the market analysis.
What’s interesting to me is how different Samsung’s strategy is to its other major smartphone competitor, Apple. There is only one iPhone released every year, and design-wise, each one has been broadly the same as the previous model, with the same size screen.
In contrast, Samsung has a bewildering number of different models that, viewed together, make almost no sense at all to the casual observer. This might seem like a recipe for confusion, but it also means that that Samsung has a phone to suit pretty much every potential customer. Want something pocketable that’s cheap? There’s a Samsung Galaxy for that. Need lots of power, a massive screen and a stylus to draw pictures with? Samsung Galaxy can help. And on it goes.
Apple is fantastic at making a product that’s very aspirational, and it makes an enormous amount of money on every iPhone, but in terms of simply shifting a lot of phones and achieving huge scale, it’s Samsung that has the winning strategy.
Both Apple and Samsung are so successful in fact, the battle for the top smartphone slot is starting to look like a two-horse race.
But it won’t necessarily always be this way. HTC was the darling of the mobile industry a while back until Samsung arrived to eat its lunch. The transformation in the company’s fortunes was rapid, and there’s every possibility that Samsung could see an equally rapid turnaround at some point in the future – in mobiles, you’re only as good as your last hit product.
There’s also a chance that Samsung’s scale could turn out to be a weakness as well as a strength. In some respects, Samsung reminds me of Sony in the years before it all went wrong. There are lots of divisions that don’t appear to communicate with each other very well, making a vast number of different products, most of which are decent, but not outstanding.
There’s a desire to be the number one player in every category Samsung is in, which is laudable, but probably unachievable. Does Samsung really need to be the number one maker of cameras in the world? Or MP3 players? Probably not. I can’t help but wonder whether its smartphone profits are covering up some deeper organizational problems. Then again, it seems to be working for now, so it may all turn out fine.
If a company was to snatch the smartphone crown from Samsung, which would it be? One answer might be Nokia, which may seem like a crazy thing to say following its latest set of disastrous financial results. But there is still a chance that it might not be game over.
Nokia’s flagship mobile running Microsoft’s Windows Phone, the Lumia 900, has recently appeared in America to decent critical acclaim. In the U.S., Android doesn’t have quite the same grip on the market that it does in the UK in particular, so there’s an outside chance Nokia could sell enough handsets to convince developers deal with the platform’s biggest problem – a lack of apps.
If that happens, the launch of Windows Phone 8 could open the whole field up again.
The opinions expressed in this commentary are solely those of Jason Jenkins.