lower-priced competitors, Samsung finds itself losing market share in
the all-important smartphone category. How can it avoid irrelevance?
Only two years ago, it seemed like the juggernaut that was Samsung's
mobile division was nearly unstoppable; there was even talk of the
Seoul-based company getting so big that its domination of Android market
share was causing nervousness throughout the halls of the Googleplex.
With enough market power, the story went, Samsung would be able to
extract concessions from Google such as a cut of revenues from ads
served on its devices.
The implicit threat there is, of course, that Samsung had become so
popular that it could dump Android for another platform — like
home-grown Tizen
— if Google was not willing to play ball. But two years later, the
landscape has shifted rather dramatically. From the top to the bottom of
its considerable smartphone lineup, Samsung has seen a withering of
interest from consumers.
On the high end, its latest flagship, the Galaxy S5,
did not live up to expectations, failing to outsell its predecessor (in
a model year that saw Apple's pair of iPhone 6's vault the company to
record profits). Moving downmarket,
Samsung has also witnessed a decrease in popularity of its more affordable models, especially in the critical Chinese marketSamsung has also witnessed a decrease in popularity of its
more affordable models, especially in the critical Chinese market —
where home-grown Xiaomi is now the market leader.
Regaining lost sales in the cutthroat mobile sector is critical, even
for a corporation as diverse as Samsung. Whereas its recent success was
built largely upon the popularity of its phones, in the all-important
fourth quarter of last year, the most profitable division ended up being
processors. If it can't find a way to get back on track, declining
handset sales — which have traditionally been able to prop up other
underperforming verticals — risk impacting the health of the company as a
whole.
It's going to take more than a successful Galaxy S6 launch on March 1
to right the ship, though that is a very important part of the formula;
if Samsung can't slow down Apple's momentum in the high-profit-margin
flagship category, volume sales of its downmarket products won't be
enough to buoy the bottom line. To its credit, the company apparently
plans to release a pair of devices
under the Galaxy S6 branding, with one of them tipped to be an
ultra-premium model whose display will curve down both sides of the
handset, à la last year's Galaxy Note Edge (which apparently sold better than expected).
Shrinking the Galaxy
Will this two-pronged flagship approach be enough? After all,offering a pair of flagships now seems to be turning into a mini-trend:
along with Apple and Samsung, HTC is likely to release two versions of
its One M9, also set to be unveiled on the first of March.
Simply adding more phones to the mix doesn't seem to, in and of
itself, serve as a winning strategy; both HTC and Samsung have been
victims of bloated portfolios in the past few years, and neither company
was moving in the right direction even as its offerings expanded.
Samsung is well known for tailoring handsets to plug into every
perceived gap in market demand, but with competition in this industry as
fierce as it's ever been, a new strategy is probably warranted.
Samsung seems to be keenly aware that it's become a victim of steady
model creep, and it has publicly vowed to streamline its 2015 portfolio.
I'll suggest that it takes another, perhaps counterintuitive step, and
discontinue its use of the Galaxy branding for all but the S and Note
series.
When there were only a handful of Galaxy devices on the market, the
brand did indeed hearken connotations of the popular S flagships — but
now, with nearly every mid- and entry-level handset seemingly named
using some combination of the words Galaxy, Grand, Core, and Prime, the
nomenclature is in desperate need of an overhaul. "Galaxy" no longer
conveys the premium status that it once did, and it may be hurting the
flagships more than it helps the rest of the portfolio.
Time for a new look
Along with a different name, the lineup is overdue for a new look aswell. Once again, Samsung is taking the first steps in this
transformation with the use of metal casings and more squared-off
corners — first exposed in last year's Galaxy Alpha
— but hardware aesthetics are only one aspect of the overall impression
that a phone gives off to potential consumers. As bezels recede and
handsets move ever closer to being floating displays, the look of the
user interface is becoming even more important — especially in print and
online advertising, where the default homescreen and wallpaper lend a
device its personality for its entire shelf life
Consumers have expressed an overwhelming dislike
of the TouchWiz design language (see the tweets below if you're not
convinced), and even Samsung itself has pulled back from using that term
in its marketing. A refreshed, heavily focus-grouped, more modern UI
would do wonders in giving the company a fresh start among jaded
enthusiasts.
And with enthusiasts responsible for much of the word-of-mouth buzz
that serves as either positive or negative marketing for retail
products, Samsung would do well to court these vocal users, tailoring
features and advertising campaigns that appeal to the early adopter.
Mobile fans continue to enjoy more and more choice in the marketplace, a
trend that has served to hurt Samsung over the past year-plus.
Samsung still ships more handsets worldwide than any other manufacturerSamsung still ships more handsets worldwide than any other
manufacturer, though, and it should use that reach to lock in the most
fervent phone buyers: those who purchase multiple handsets, and do so
nearly every year. If it can convince those folks to once again place
Samsung atop their lists, that enthusiasm will tend to trickle down to
the average consumer.
As quite a few former market leaders have proven, staying on top —
and returning to the top once a decline begins — is a most difficult
struggle. The industry has lost more than a few past leaders, including
Palm and Nokia, while others, like Microsoft and BlackBerry, survived
with just a fraction of their once segment-leading market shares. HTC
seemed destined for this category as well, but has managed to eke out
several quarters of profits after a long period in the wilderness.
Samsung is the latest OEM to find itself at this precipice, and the
decisions it makes in the coming year will define its success — or lack
thereof — for many years hence. It's not too late for the Korean giant
to find its way again, but it won't be easy, requiring it to rethink
many of the strategies that used to seem so safe and infallible.
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