Ben Bajarin: ‘Samsung will be out of the smartphone business within five years’

“We have two very different things happening in the smartphone world. We have Apple, who is growing smartphone share in many regions where people said iPhone peaked, raising ASPs, and capturing new customers switching from Android,” Ben Bajarin writes for Tech.pinions. “Then we have Samsung, who has quite a different circumstance. Samsung’s mobile phone unit is suffering from nearly every symptom found in the ‘You Are Being Disrupted’ handbook. Not shockingly, they missed estimates again.”

“The article also goes on to say their smartphones in the $150 range sold well but their premium smartphone sales are falling off a cliff. Their blended handset ASP from 105m total units shipped and 84 million of that smartphones was $180,” Bajarin writes. “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.”

“When you ship the same operating system as your competition you are only as good as their lowest price. This is the curse of the modular business model. This is also why Samsung had hopes for Tizen. They actually knew this was coming,” Bajarin writes. “I know this because I discussed it with them in 2013 and was convinced they understood this was their fate if they continued to sell out to Android. Unfortunately, Android was their only option given its momentum. I’ll make a prediction. Samsung will be out of the smartphone business within five years.

Read more in the full article – recommendedhere.

MacDailyNews Take: That long?

It’s best not to mess with karma. – Steve Jobs

Buck up, slavish copier, there’s a light at the end of this tunnel you’ve dug for yourself. A very bright light:

Thermonuclear
Thermonuclear.

SEE ALSO:
Poor man’s iPhone: Android on the decline – February 26, 2015
Study: iPhone users are smarter and richer than those who settle for Android phones – January 22, 2015
Why Android users can’t have the nicest things – January 5, 2015
iPhone users earn significantly more than those who settle for Android phones – October 8, 2014
Yet more proof that Android is for poor people – June 27, 2014
More proof that Android is for poor people – May 13, 2014
Android users poorer, shorter, unhealthier, less educated, far less charitable than Apple iPhone users – November 13, 2013
IDC data shows two thirds of Android’s 81% smartphone share are cheap junk phones – November 13, 2013
CIRP: Apple iPhone users are younger, richer, and better educated than those who settle for Samsung knockoff phones – August 19, 2013

44 Comments

      1. When you have competition that is simply playing follow the leader, as is this case, they make no technological advancements to benefit us. There’s a difference between good competition, and also-ran copycats making subpar technology that mimics the real thing but ends up leaving you disappointed. If Samsung was leapfrogging Apple in any metric beyond price, I would agree with you… but they aren’t.

        Samsung isn’t the kind of competition that makes things good… And when you use the term “fanboy”, you oughta look in the mirror when you’re throwing out coined phrases that don’t match what you’re talking about.

      2. Thought you might have noticed that no company has actually done better out of pure competition (as opposed to trying to destroy the opposition through non competitive means) than Apple but then I would expect nothing more from a fandick.

    1. Only if they have no respect for their product nor do they really care about changing the world for the better. The only thing that drives them is money. That is why immediately after they kill all competition they put a sales guy in charge and push all the engineering talent into oblivion.

      Apple is driven to create “great” products and wants to “change” the world. They don’t need competition to drive them IF they stay true to Jobsian principles. The billion dollar question is…..will they?

        1. Steinway has struggled to survive and has traded hands a number of times.Relics of the past that do not innovate always face the same outcome. Steinway was a foolish example by someone who does not have a clue.
          You should try and keep up. Read and inform yourself before you post.

    2. That’s true, but at the same time, Apple has proven again and again that they truly are different. They have values. They have a singular mission. The only think that I don’t like about the “new Apple” is how they are saying “this is how things will be “. But maybe that has always been there, it’s just overwhelmingly visible and loud now.

  1. When the first iPhone came out, Smart people with less money were like “Ye!, if only there is a cheaper version of the iPhone i will definitively buy it..”. 2 years later, there was a cheaper iPhone, the first iPhone (Because there was also a newer iPhone). So if you wanted an inexpensive iphone, you have to wait and buy an older iphone that it will be far more advance than any other brand.
    With samsung, who ever wants to buy a cheaper phone, there are tons of it and most of them a lot better than the samsung phone.

    1. That’s not the smartphone business, it’s the component business. However, the signs are that there won’t be so much money to be made from that business in future now that TSMC has demonstrated that their chips are superior to Samsung’s. Samsung haven’t got much of a bargaining position any more.

  2. I am no fan of Samsung phones, in fact I was offered a full contract with my employer but turned it down for my own iPhone. But Samsung makes some great products, like RAM, SSDs and televisions. I want them to stay in the game because they push Apple to innovate and I have not forgotten the bad years before the return of Steve Jobs.

    1. I’m not sure how you judge televisions, but last week I stayed in a high quality holiday rental cottage which had a Samsung TV, satellite receiver and sound bar. The user interface was absolutely dreadful and it took quite a while just to get it working. The picture was over-saturated with “peaking” around the highlights to make it look sharper than it really was, while flesh tones had a very unnatural flat quality, but the worst aspect was the extremely heavy bass from the sound bar. I couldn’t find any way to turn it down to an acceptable level as it only offered pre-set options, such as flat / music / movies / games. Removing the power from the sub woofer removed all the bass, which was even worse than having too much.

      I’ve owned a lot of good quality TVs in my time and have worked in the broadcasting business for decades, but this Samsung setup was without a doubt the worst that I’ve ever come across and I would guess that it was quite an expensive one too.

  3. Oh please MDN…

    Jobs said he would go nuclear agains Android (aka Google)… Not Samsung.

    And for your info… Android goes well and has not much to fear actually:
    http://stats.areppim.com/stats/stats_mobiosxtime.htm

    Instead of a nuclear bomb it’s much more that:

    As for Samsung… Stop praising yourself (as if iOS was your baby). iOS is not the problem but Chinese brands like Huawei who have taken their market shares (and expending it)

    BTW… I don’t give a rat’s a$$ about Samsung. I won’t miss them in the mobile market even if they won’t disappear…

    1. I think you got it wrong here. There is a justified animosity towards Samsung here because they had mostly coined whatever feature or function Apple had launched (the latest of them being the pink colour).

      Android is actually good for iOS. It is a perfect training platform for future iPhone users. It’s market share may be much larger, and even the store may have more apps, but if we take out redundant Chinese apps of dubious nature, iOS is every developer’s platform of first choice.

      Make no mistake: market share is important, but it is definitely not the complete picture. Samsung cannot succeed in the commoditised phone market when the functionality of their premium model is largely the same as Meizu’s $80 piece of plastic.

      1. Rational talking here in MDN is really refreshing. Thank you for that.

        That said I don’t share your opinion on some thing.

        Yes : A big part of Android’s market share is composed of cheap devices (in the 80-150$ range) but there is still a not so small minority of android devices who are high end devices. People who buy these devices simply have needs not covered by the iPhone. It’s as simple as that. In my case there are 2 functionalities I couldn’t live without now. Dual Sim and SD. Android is certainly not a good entry platform to iOS as well as iOS isn’t a good entry platform for Android. Once you live in an ecosystem you mostly stick to it. The only reason why more Android users go to iOS than the opposite is because there are more Android users overall… I would love to see the numbers expressed in x per 1000.

        The security concern you mention are true only when users live outside the playstore. Even if there are many potential (The potential here is important) security problems in Android there is no large scale attack I’ve heard of for now… The security model in Android is far from being so bad as people in MDN describe it. If you are interested, I can link you an article explaining it.

        Has Samsung copied Apple? Absolutely no doubt in their first models. They have been condemned for it and the compensation are high… Now let’s be very clear about it… NOBODY with two brain cells has bought an Android copy thinking it was an iPhone. Those who bought them knew it were copies and wouldn’t have bought the original anyway… It’s like the 10$ Rolex… BTW, Apple also copied functionalities from Android and not so few of them. I have nothing against it. As long as copyright is respected (Copyright != Patent), if each platform adds functionalities which makes life for users easier… I always agree

        People here hate Samsung… Good (I really don’t care. I don’t use a brand but a product). What I was referencing is the picture the webmaster (troll?) of MDN put to illustrate this article which itself is a reference to Steve’s statement about going thermonuclear which again indirectly states that Apple won over Samsung. It’s this I don’t agree with. I just said Apple has nothing to do with Samsung’s problems.

        1. Thanks for engaging in rational discussion.

          I don’t think there is a not-so-small minority of high-end Android devices, unless you consider $300 – 400 phones high-end (when cheapest last-gen iPhone is $650). The premium Android market ($600+ devices) has largely disappeared since the introduction of iPhone 6.

          As one of those Android-to-iOS migrants, I can attest that there is a very strong disproportion skewing in favour of iOS. The market share difference in the developed world isn’t that large (perhaps 1:5 at most), but the number of migrants from Android to iOS is overwhelming, compared to the opposite direction. My anecdotal evidence is little more than anecdotal, but in an office of about 20 people, we had some 12 android users about three years ago. Today, the last remaining Android user is contemplating a clandestine upgrade (her husband is a certified Apple hater, no Apple gear in her household, so she has an LG). As is said, this is completely anecdotal, but seems to be inline with verifiable data out there.

          As far as the thermonuclear war Steve famously started against Google/Samsung, make no mistake about this: Samsung’s most significant source of trouble is disappearance of the premium device margins from their bottom line, which was directly caused by the large-screen iPhone 6. $80 android phones have been out there for over five years, and yet that didn’t prevent Samsung to emerge as the dominant player. The fortunes were rapidly and dramatically reversed when their large-screen premium phone wasn’t the the best game in town.

        2. …”NOBODY with two brain cells has bought an Android copy thinking it was an iPhone.”

          While that is likely true, it reminds me of another interesting phenomenon. Some ten years ago, iPod was rapidly becoming the dominant personal music player in the developed world. Podcasts were invented as a consequence of iPod’s ubiquity. Microsoft even attempted (without success) to call them ‘blogcasts’ to steer people away from the ‘Pod’, to avoid further imprinting the brand name into the world’s minds. Without success, as I said since, in the developing world, iPod very quickly became the generic name for any MP3 player (“So you have an iPod? Which brand? Coby? Sandisk? Rio?”). Today, the same phenomenon exists for smartphones. In some parts of the world, they say an iPhone; as in “Which iPhone do you have? HTC? Huawei? Meizu…? Samsung?” I don’t think these people confuse the real thing with the others, but the name became the synonym for the technology it originally launched.

        3. I agree with you with the iPad part.

          Apple has created a market it owned by itself and that has only been killed by another market where Apple was also a major player (smartphones).

          The iPad has become a name describing the device in the same way “frigidaire” described a fridge in French speaking countries for many many years.

          The same has happened for tablets where once again I agree with you. Many people confuse iPad and Tablet.

          Where I don’t agree with you is about the iPhone. I’ve never heard someone speak about the HTC (or whatever non Apple brand) iPhone. People perfectly recognize these phones for what they are… iPhone or not iPhone. They have more difficulties in differentiating between various Android brands but that’s another story

        4. Always happy to share opinions 🙂

          You said : “unless you consider $300 – 400 phones high-end (when cheapest last-gen iPhone is $650)”

          In my opinion, in the android world 300-400$ is decent mid-range while >400$ is high-end (I don’t include Samsung in this).

          Now when you compare this to the >650$ for an iPhone it seems cheap. Why didn’t I include Samsung? For a very simple reason. In my opinion there are only 2 brands who used their name as “excuse” to put a very high price tag on their devices… Apple and Samsung.

          The new Chinese players in the market made very good phones with very low margins and produced quality devices for a decently low price. You can check the specs of the following phones and you will see they are not ridiculous (Xiaomi Mi Note, Meizu MX5, Lenovo Vibe P1, Huawei Honor 7). These phones killed the high end market share hold by Samsung. They did it not by producing low priced and low quality phone but by producing high quality phones for low prices. If I remember well, Huawei had an >140% YOY progression. If it had been iPhone which had “stolen” Samsung’s market, the iPhone market share would have exploded of >10~20% market share. It hasn’t. Even the Swiss market which is well known to be the market with the highest iWhatever penetration has seen only a short-time tendency reversal when the large screen iPhones came out but seem to continue the same trend since 5 years.

          As for anecdotal stories… They are, as you say, anecdotal even if they stay interesting to illustrate some trends. So let me told you one of mine 🙂

          I’ve managed IT infrastructures for quite some companies in Switzerland (Apple country) for many years now. I did this also 5 years ago when android phones where almost not used there. Many people in these company staid with their iPhone but some started to use Android. As it was a market with high iPhone penetration almost 100% of those who changed platform went from iPhone to Android.

          Anyway… All these are only anecdotes. Look at the curves from the link in my first post and you can see the trends by yourself.

          Each platform has good and bad aspects. Degrading one platform because X doesn’t like it is just plain stupid. Actually I use Android by choice. Not because it’s cheaper or because “I’m a noob”. I use it because it has things I want, because I appreciate its flexibility and finally because I can choose a phone following my tastes.

          You went to Apple’s world maybe for its ecosystem and/or its simplicity and are happy with you found there? Perfect. I will never tell you that you made a bad choice. You choose the phone that answered your need. It’s as simple as that.

        5. I agree that ‘high-end’ will differ in even similar products.. For example a ‘high-end’ digital watch range would be different from that of a ‘high-end’ analog one. What makes something ‘high-end’ to me is having both price AND quality/features to be on the upper end of the products’ category.

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