Beleaguered Samsung’s mobile woes rooted in hardware legacy, little understanding of software

“Efforts to revive its once stellar smartphone fortunes may be doomed if Samsung Electronics cannot overcome its dominant engineering culture, according to serving and former executives and those who have dealt with the company. This culture, they say, has stymied many previous efforts to develop software and service platforms to support the smartphone business. In the past year several such services have closed down, at least one of them within a year of being launched,” Jeremy Wagstaff and Se Young Lee report for Reuters. “‘There’s a lot of distrust of top executives who can actually implement stuff that is more of a software and services offering,’ said one person familiar with the company’s inner workings. ‘It’s still ‘we know how to sell boxes, we sell boxes.'”

“Without its own distinctive software, content and services, Samsung has little to differentiate itself from other Android phone makers selling similar devices at lower prices,” Wagstaff and Lee report. “Interviews with former and serving employees paint a picture of confusion and overlap between competing divisions, where the short-term interests of promoting hardware trump long-term efforts to build platforms that would add value for customers and increase their loyalty to the brand… ‘Samsung’s upper management just inherently doesn’t understand software,’ the former employee said… As a result, critics say, initiatives involving software or services languish and often fail.”

“To be sure, Samsung’s struggles are hardly unique – firms such as HTC Corp, Nokia and BlackBerry also failed in their attempt to develop viable platforms,” Wagstaff and Lee report. “But former and serving executives say Samsung has failed to support innovation within the company, shrinking margins to stay competitive while losing ground to Chinese rivals such as Huawei Technologies Co Ltd. The mobile division’s earnings contribution shrank to 39 percent of January-September operating profit, on track for the lowest contribution since 2010 and down sharply from 68 percent in 2013. Market share is expected to slip below 20 percent this year, from 24.6 percent in 2013, according to research firm Trefis.”

Read more in the full article here.

MacDailyNews Take: It’s too late for Samsung in smartphones now. They had their run (thanks to an inept, antiquated legal system and confused consumers). But, that run is over now. Smartphone buyers have wised up and an entrenched, debilitating culture cannot be turned around on a dime.

All iPhone knockoffs, including Samsung’s, pale in comparison to the real thing.

SEE ALSO:
Beleaguered Samsung to attempt to knock off Apple iPhone’s 3D Touch – December 14, 2015
Beleaguered Samsung names new cellphone head in bid to stem market share losses to Apple iPhone – December 1, 2015
Beleaguered Samsung axed 5,000 employees over last year – with more cuts on the way – November 20, 2015
Apple to close in on Samsung in worldwide smartphone market share in 2016 – researcher – November 20, 2015
Apple’s iPhone: The most absurd dominance ever and it’s getting even more absurd – November 19, 2015
Apple’s iPhone can soon reap 100 percent of world’s smartphone profits – November 17, 2015
Apple’s iPhone owns 94% of smartphone industry’s profits – November 16, 2015
Ben Bajarin: ‘Samsung will be out of the smartphone business within five years’ – November 2, 2015
Huge crowds line up in Samsung’s backyard to get iPhone 6s/Plus in South Korea – October 23, 2015
Struggling Samsung to see first-ever year-over-year drop in smartphone shipments in 2015 – October 15, 2015
Study: iPhone users are smarter and richer than those who settle for Android phones – January 22, 2015

[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]

19 Comments

  1. Actually, all who follow mdn know full well Samsung’s problems are in their DNA and business model. You can only go so far copying the true innovators and beating everyone else on price and volume, this lasts just long enough for another copycat to come along and beat you at your own game.

  2. As MDN said, it’s way too late now for SameDung to develop an OS, platform and ecosystem of their own. I gave them props for at least giving it the good-ole-boy try with Tizen but we all knew they weren’t going to get anywhere with that. SameDung’s mobile business will suffer a long painful decline and simply disappear with a whimper like BlackBerry and Nokia. This much is set in stone. There is just no way SameDung can avoid this fate. Software and services aren’t in their DNA. All they’re good at is stamping out chips, displays and knock-offs.

      1. I’m sure it isn’t bad. I think Intel is/was on board with Tizen as well. But, like you say, an OS platform is useless without an army of developers supporting it and why would developers want to spend their valuable time on a new unproven platform when it’s hard enough to stay on top of iOS and Android?

  3. When Apple bought components that were pretty well off the shelf, it was fairly straightforward to copy what Apple was doing, but now that Apple uses so many parts that are designed by Apple and not available to others, it is very much harder to copy Apple and anybody trying to do so would not benefit from the economies of scale that Apple enjoys.

    In a nutshell, would be copiers will have to pay higher prices for components that are less good. The performance and quality of their product will be inferior while there would be less profit margin available.

  4. I worked for Samsung in Korea before. It is known that all Koreans companies are good at hardware manufacturing, not at software that requires original thinking. They reverse engineer everything, copy and employ brute trial and error to get it right. There is no originality. These things are quite obvious to any non-Koreans who work there.

  5. As an expat who has lived decades in South Korea, I would point out that you’re painting with a mighty wide brush with the “no originality” comment. I’m no fan of Samsung but would suggest that companies and situations do differ. Have you checked out LG’s UHD OLED television line recently? Or read Koh Eun’s poetry? Or sampled Buddhist cuisine at Odaesan? Could it be that you hung out mostly with similarly minded bitter non-Koreans?

    1. First let me tell you that I worked in OLED area and considered an expert. LG’s research level is definitely better than that of Samsung in this area. However, you should know that currently, OLED area is in development phase, not in research phase. This development includes making finer pixels, etc and involves manufacturing improvement rather than any novel invention. The inventions for OLED were done in US, UK and England. I have a a PhD degree in this area, worked in USA, Japan, Korea, Taiwan, andChina, with total experience spanning decades, so I know this area extremely well.

    2. @taosbob, OLED technology at LG is better that that at Samsung. First of all about me, I am considered an expert in OLED area and was invited by Samsung to work on it in early 2000. Currently the OLED technology is mostly in the development state, and not much of research is going on. By development state, I mean that making pixels smaller, improving brightness etc, which requires improvement in manufacturing, an aspect Korean companies are good at. Most of the initial research was done in US, UK and Japan. Just to let you know, I have a PhD degree, and OLED experience in US, Japan, Korea, Taiwan and China with total experience spanning decades.

    3. @taosbob, in your comment, you mentioned that “could it be that you hung out with bitter-minded non-Koreans” was totally uncalled for. I also did not paint originally comment with wide brush. If you read my original comment, you would realize that I was taking about technology aspect. My observation was from my own experience working their and those from non-Koreans co-workers (mostly invited Japanese researchers) and not from hanging out with any bitter foreigners. There was no need to make such negative comment in order to make your point.

  6. Imknow that it was implied by the legal aspect of the MDN Take ®, but I thought that a small addition would clarify the situation:

    “They had their run (thanks to shameless copying of Apple designs and functionality, an inept, antiquated legal system and confused consumers)…”

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