Is Samsung’s Exceptionalism Coming to an End?

by Jan Dawson   |   July 3rd, 2014

I’ve always found it fascinating the two dominant companies in the smartphone market – Samsung and Apple – have such different business models. On the one hand, you have a company that approaches the market in a tightly integrated fashion, combining hardware, software and services in a proprietary way, encapsulating them in a very small number of high end devices sold at premium prices. On the other hand, you have a company which appears willing to try anything and to fill every possible niche in the market, from budget to high end, with its own hardware running third party software and services. The commentariat has always speculated about how sustainable Apple’s business model is, but I’ve always wondered the opposite: how sustainable is Samsung’s business model?

The framework my firm, Jackdaw Research, uses to analyze companies’ ability to compete in the consumer technology market includes five domains across which companies compete, as shown in the diagram below:

Five domains and integration

The really successful consumer technology companies, and especially those that hope to compete effectively in consumer devices, need to combine at least three or four of these five domains and then provide meaningful integration across them. The irony is, although much of the money in this space is in hardware, software and connectivity, those three domains are merely means to an end: namely, creating and consuming content and engaging in communication. Consumers don’t buy hardware, software or connectivity for their own sakes. They buy them because they believe they’ll be able to consume and create content and communicate with the people they care about. If you look at Apple, Google, Microsoft, Amazon and Facebook, they all compete across multiple domains in the chart above.

However, Samsung has always been something of an exception to this rule, and as such its success has been an anomaly under this theory. Samsung certainly checks most of the boxes on the devices side, making everything but game consoles, and also participating in the wearables category not explicitly shown. But it is very weak across the other four domains. In software, it relies almost entirely on Android and to a lesser extent Windows Phone for the operating system layer on smartphones and tablets. It has a major stake in Tizen, but has, as yet, not launched mainstream devices running that OS. It has software of its own, but it’s mostly a thin layer of customization on top of Android rather than a meaningful contribution of its own to the user experience. It has ChatOn, a communications app, but uptake has been limited and it hasn’t caught on like competing messaging platforms have. In content, Samsung has made investments in the past in its own stores, but has slowly wound them down. It now has the Milk Music service, and is reported to be working with M-Go to create yet another video service, but it’s an incredibly thin offering in such a crucial space.

And yet Samsung has been extraordinarily successful. The keys to its success lie in two major domains: marketing and a vertically integrated hardware operation. On the marketing side, Samsung has vastly outspent all other Android smartphone manufacturers and become the default option for people in mature markets looking to buy a mid to high end smartphone. And its vertical integration has allowed it to compete very efficiently and effectively with screen and other component technology. As a result, it has become the largest smartphone vendor by shipments and revenue, and dominates the Android market.

However, cracks have begun to show in Samsung’s model over the last several quarters. As growth in the overall smartphone market both slows and shifts to emerging markets, Samsung hasn’t been able to keep its revenues and shipments growing at the same rate. Revenues in Samsung’s Mobile business unit have stopped growing, as growth rates have declined dramatically since early 2012:

Samsung Mobile revenue growth year on year

The challenge for Samsung has several segments to it:

  • Overall smartphone growth is slowing, putting pressure on Samsung’s other device categories to provide stronger growth
  • Samsung’s dominant position in Android is being assailed at the low end and in the mid market by a variety of competitors, many of them from China
  • Google is reining in Android and looking to reassert its own position and services in the smartphone market, putting pressure on Samsung and others to tone down their customizations. New flavors of Android for wearables, the car and TVs will provide even less room for customization
  • People are at any rate apparently tiring of Samsung’s customizations of Android and starting to look more seriously at smartphones which provide a stock Android experience or at least something more like it
  • Samsung’s marketing spend is starting to experience the law of diminishing returns, where each dollar of spending no longer conveys the advantage it once did. It has effectively saturated the market and can no longer derive the advantages it once did from its far superior ad spend.

All these challenges have arguably been visible on the horizon for some time, and Samsung has therefore had quite some time to prepare for them by expanding out of the hardware domain and into the adjacent three domains: software, content and communications (connectivity is largely the province of carriers). As such, it is now poorly positioned to compete and differentiate itself effectively in the face of compelling hardware from competitors and the other challenges it faces. It seems to be selling lots and lots of tablets, but many of them are heavily discounted older models or are bundled with smartphones and TVs in the retail channel. Samsung’s growth in tablets has therefore been subsidized, and is likely unsustainable in the longer term. The question now becomes whether Samsung has done enough work behind the scenes to start dialing up its efforts in the other three categories it can reasonably play in, to bolster its position and start growth going again.

This past week, Samsung’s CFO admitted its second quarter financial results were going to be somewhat disappointing. This continues the trend we’ve been seeing in past results, but suggests a significant worsening. At this point, we all have to start wondering whether Samsung and Apple really have been pursuing equally sustainable though very different business models, or whether Samsung has been enjoying a sort of exceptionalism, a temporary immunity from the inevitable market forces that shape the consumer technology industry. Will Samsung be able to prove over the coming months it has what it takes to succeed long term, or will its lack of investment across software, content and communications, and the integration of all these, start to really hurt it? What are the broader implications if Samsung really does start to suffer, both for Google and for the broader Android ecosystem? These are questions I’m going to be looking to explore in the coming weeks and months. I’d be interested to hear your thoughts in the comments too.

Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw, a technology research and consulting firm focused on the confluence of consumer devices, software, services and connectivity. During his thirteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.
  • Kizedek

    “On the marketing side, Samsung has vastly outspent all other Android smartphone manufacturers…”

    Apparently, Samsung has vastly outspent everybody, including Coca-Cola. It certainly was clear this would be unsustainable.

  • peter

    Samsung has approached smart phones in the same way as they would approach the market for TVs, refridgerators or PCs. The problem in all those other markets has always been that after initial difficulties are overcome (e.g. getting the technology working, establishing supply lines, commoditizing components, scaling up processes), what follows is a dog-eat-dog world with slim margins. I think the true brilliance of the Samsung strategy has been their ability to scale up their production quickly. But it is not a lasting competitive advantage.

    Horace Dediu’s article last year on “The cost of selling Galaxies” (http://www.asymco.com/2013/04/02/the-cost-of-selling-galaxies-updated/) was already giving a sense that Samsung — by necessity — was becoming reliant on heavy advertising and sales incentives, and was encountering diminishing returns in doing so. In consumer electronics their approach ultimately creates a weakness in that competitors with a good product that are willing to forego that sales spend or use different channels are able to undercut you by a significant margin (as usually happens in consumer electronics markets).

    As things stand, Samsung needs to rely on Google’s Android, its own processor technology is not truly unique or cutting edge, it does not have its own ecosystem and matching tools, etc. That means they are not really masters of their own destiny and are not able to demand the premium pricing that their cost structure requires.
    Samsung are a fearsome competitor in the other consumer electronics markets that they operate in. They will not go away or fail, but I just can’t see them holding on to 60%+ of the Android market as they do today. To use Warren Buffet’s terminology; they do not seem to have a big enough moat to keep intruders out.

    • Peter

      problem is that Android doesn’t provide enough food for the alligators. No-one other than Apple and Samsung is making any money. The other companies are likely to be gone before long, with the expect ion of Microsoft/Nokia (deep pockets). And maybe HTC.

    • rattyuk

      Here’s the thing. Samsung have had strategy that has worked well for them. Who is the leader? Clone them! That is it. Unfortunately for Samsung they’ve not been up against a company that has had as big a war chest as Apple. They really had the impression that they could just out-legal any company because of the money they had. Apple fought back. But that didn’t matter because Samsung’s legal team knew they could spin it out for years and years… And so it came to pass…

      Meanwhile, Apple wasn’t taking it lying down. They saw what Samsung was doing and eventually came up with an entirely new strategy. It didn’t involve “features” that could be cloned. But a set of experiences that involved a combination of hardware and software that if you were relying on the “Google Experience” couldn’t be cloned.

      Samsung have already claimed that they are not going to meet their financial predictions. |

      Going to be a really awesome year going forward.

      • peter

        So effectively the fast follower strategy no longer works for Samsung because of Apple’s proprietary technologies At the same time Chinese white box phone makers are able to fast-follow Samsung, denying them premium pricing to a large extent. I guess the July earning announcement from Samsung will give a decent clue as to what will happen next.

  • The Gnome

    You can’t copy at will and keep up with the big boys. They just need to find someone new to follow. I’m not sad to see Samesung falter because of their shady business practices that have been going on well before smartphones. Fortunately they didn’t suck the life out of apple like they did sony.

    • art hackett

      And the rest of the tv makers, resulting in a general loss of quality there as well.

  • klahanas

    I’m not rooting for them in any way, except as it benefits the consumer.

    Samsung has several cards they can still play.

    -The ability to reduce prices, take the hit, much more than the competition.
    -This could be done without reducing features.
    -They can cut the number of models in half and still have a bazillion of them.
    -They are not tied down to a form factor, this gives them feature latitude. For instance, make a phone 50% thicker and heavier, but which can last several days. This is a choice for some.
    -There will always be people that will not want a device from that other leading OS environment. Though they can go to another Android OEM. Choices are good.

    Other’s enjoy these benefits as well, except for the price reduction.

  • Mark Jones

    Besides marketing and a vertically integrated hardware operation, Samsung also has a carrier distribution network likely even better than Nokia’s was. (Nokia had a weakness in the US that Samsung doesn’t have.) But in the same way that Nokia lost favor with the carriers, Samsung can as well. And if the carriers continue to lose influence, this advantage will be diminished.

    The vertically integrated hardware operation not only created lower costs, but it enabled them to be very responsive to market (and carrier) desires, rapidly churning out hundreds of slightly different models for each perceived market segment. They did this even better than Nokia did in the past. But if Samsung can’t differentiate its high-end models from its low-end models in ways valued by consumers, this advantage will become less effective, and possibly counterproductive.

  • FalKirk

    “I’ve always found it fascinating the two dominant companies in the smartphone market – Samsung and Apple – have such different business models”

    Me too. In a way, it’s probable that you cannot have two great companies being simultaneously successful in the same market unless their business models were so very different. Differentiation hardly guarantees success, but sameness in business models almost certainly spells doom for one competitor or the other.

    • http://www.beyonddevic.es/ Jan Dawson

      I’m not sure I agree with that – most markets are characterized by players with the same fundamental business model but subtle differences, e.g. focusing on a different segment of the market. Having a market with two dominant players utilizing very different business models has to be the exception rather than the norm. Can you think of other markets where what you’re describing is happening?

  • Peter

    Samsung has long described itself as a “fast follower”. That’s true, but it follows just about everything although Apple receives special attention.

    But their overall efforts remind me mostly of a caricature Polish mine detector (apologies to the Poles) – stomp, stomp, stomp – waiting for something to happen.

    Heck – even the super-duper whizz-bang heavily hyped Galaxy S5 has been outsold by the “failed” iPhone 5c. With that for the main event, what do we expect for the encore?

    • rattyuk

      Sapphire glass, 64 bit.

      Fast follow that!

      • klahanas

        They didn’t invent either one. Sapphire is a supply chain thing, and 64 bit is actually already old news as a technology except in mobile. It’s mobile that’s catching up.

        • Mark Jones

          And we’re talking about fast followers in mobile, not where it’s old news. Almost one year later, there are still no 64 bit Android phones, so clearly not-so-fast anymore despite the Samsung exec boasting in Sep 2013 that their “next” phone would be 64-bit.

          As for sapphire, it is Apple’s contribution that’s improving production. Production of materials is as important as the design and integration of components or software when one is making hundreds of millions of units. It was true, on a much smaller scale, for aluminum and MacBooks, as well. Jony Ive is talking about this stuff all the time. Having the best supply chain is a significant competitive advantage, and one that Samsung has over other Android vendors.

          Also, as devices become more personal, and moves further out of the realm of geeks and into the mainstream, fashion will become even more important. And materials will as well.

          • klahanas

            64 bit comes when 64 bit comes. Adding “In mobile” is an achievement I suppose, but a following one nonetheless. This is kind of like the meme where you get a patent by adding “in a mobile device” to any existing patent. Let’s see other’s vision of what 64 bit means when it comes. Remember, the best ARM chips offer Atom level performance. Great for battery usage, not performance. If “64 bit-ness” is important, I’m already on my PC for that application.

            Apple created a market for sapphire glass. I don’t know if they employ the materials scientists required to add the value needed to adapt it to their devices. Maybe they do. This will be a thin coating on the device, not anything ornamental. It is a good material apparently for scratch resistance. Now, will they magically over-market sapphire? Yew betcha!

          • Mark Jones

            The 64-bit-ness was not important for addressing space. I think it was/is important for the speed and architecture gains that allows Apple to build-in encryption (privacy) without hampering user-perceived performance.

            Aluminum was not ornamental either, but it sure does make MacBooks look a lot nicer than plasticky laptops.

          • klahanas

            Respectfully, “look a lot nicer” is ornamental. Rather, it was ornamental as well. I could be wrong, but the glass will still look like glass when using sapphire.

          • Mark Jones

            But a lot nicer glass ;)

          • klahanas

            No doubt! ;-)

        • FalKirk

          “They didn’t invent either one.”

          Guttenberg didn’t invent any of the pieces of the printing press either. Some of the inventions therein were over 800 years old. But the way he assembled them was unique and uniquely valuable.

          Don’t be comic book guy from the Simpsons. Give credit where credit is due. Ford didn’t invent the wheel yet his Model-T was still a breakthrough in transportation. It’s not who invented it, that matters. It’s who made it useful.

          • klahanas

            See my reply to Mark Jones above.

        • rattyuk

          Instead of spending money on marketing, Apple spent the money securing the Sapphire glass output. I think this is similar to their approach with components in the iPod back in the day.

          The point being that everyone’s roadmap up until the A7 release was to keep adding more cores to the base chips. Samsung, of course, announcing a multi-core custom chip for their devices but then releasing with a cheaper, differently spec’d chip for say the US market. Sort of bait and switch really, but they didn’t really get called on it.

          The new instruction set with the 64 bit ARM is not old news, allowing 20+ years of cruft to be removed from use.

  • http://naofumi.castle104.com/ Naofumi

    It’s very interesting that you call Samsung “exceptional”. This is because, at least in my interpretation, the trajectory of Samsung’s accent and decline is precisely what Clayton Christensen’s theories would predict.

    1. When the product is not good enough, the attractive profits flow to the integrator. This was the situation at the beginning. Samsung’s ability to integrate the hardware stack and to also put a UI (that was attractive in the sense that it more closely imitated iPhone) on top was the reason they had the best Android product.

    2. As technology improved, customized integration became less necessary. This caused modularity in the hardware stack. SoC vendors like MediaTek are prime examples of the hardware becoming more modular. Also, as Android got its act together and became less ugly, Samsung’s ability to put their UI on top became less important and even downright annoying. Hence the software vendor (Google) increased its power. In fact, integration within the software stack increased. In total, the Android value chain became modularized and Samsung’s strength as an integrator waned.

    3. Samsung tried to buck this trend by creating products that we much better than those assembled from modular parts (which is the same as Apple’s strategy). Hence they designed their own CPU and added features to their software. Unfortunately, both were unsuccessful. Neither created value that appealed to their customers.

    Christensen calls this either “law of conservation of integration” or “law of conservation of attractive profits”. It describes how the attractive profits in the value chain shift is distributed between each player as the market evolves.

    Furthermore, this theory also explains some other things.

    Modularity of hardware explains how Xiaomi could quickly create great phones without having any history of hardware expertise like Samsung or HTC. It also explains why very competitive local smartphone brands are cropping up.

    it also explains why Google now has the power to reign-in Android. The negotiation power of the integrators has declined and has shifted to the OS and service vendor. Google did not have this power until the hardware stack became modular.

    I find analysis frameworks that look at the current market situation to be generally incapable of understanding change. Porter’s Five Forces is an example of a static analysis that fails to incorporate how tech-evolution will change market dynamics. On the other hand, Christensen’s theories are all about change, and how power and profits shift with it.

    • peter

      I take your point. However, the question in my mind was not whether Samsung’s business model would eventually run into trouble. It was more about how they were able to defy gravity for so long and get to a 60% Android market share. I think in that sense Samsung has had an exceptional run to date, even if it seems unlikely to continue.

      • http://naofumi.castle104.com/ Naofumi

        Yes. I agree that you have to explain both Samsung’s success and recent struggles. A theory that explains only one of these isn’t really a theory.

        In my explanation, the reason why Samsung was strong was because technology (both hardware and software) was not yet “good enough”. This environment favored large OEMs that had strong hardware expertise and also were good at skinning the UI (specifically, mimicking iPhone).

        When technology became good enough, OEMs could outsource to China and/or use SoCs from MediaTek, etc. Hence, they didn’t need so much hardware expertise. Also, the Android UI became good enough that they didn’t need to customize the UI anymore. You didn’t need to be a Samsung anymore to sell good phones.

        In a single sentence, the advancement of technology changed the environment. The environment used to be optimal for companies like Samsung. Now, it’s hostile for them.

        • http://www.beyonddevic.es/ Jan Dawson

          I think that’s part of it, but I also think Samsung rode the wave of rapid growth in mature market smartphone penetration, and benefited hugely from being the default option for people looking for an Android smartphone during that period. Now that growth is slowing, I think some of the cracks that growth papered over are beginning to show through.

    • klahanas

      “Hence they designed their own CPU and added features to their software. Unfortunately, both were unsuccessful. Neither created value that appealed to their customers.”

      Oh, I don’t know… The CPU’s are quite good. The software is silly sometimes, but with Android being open, Google has it’s own alternatives. There are other alternatives as well. Samsung customers aren’t forced to use Samsung’s Apps. Android has internal competition, and that does have positive attributes for customers.

      I understand the business aspects of what you’re saying. In a very macro view, that’s “sport”. (An important sport). The seller and the buyer are on opposite sides of the table however. The unaligned buyer doesn’t really care. So what if Samsung’s profits fall? (Beyond human impact issues).

      As a data point of one, I always carry two phones. I currently own an HTC One (M8) and a Galaxy S5. I like them both. When abroad, I also have an unlocked HTC One (M7) to use with local SIM cards. As long as I can have latitude (choice) within an ecosystem, how vulnerable am I to any one manufacturer?

      • http://naofumi.castle104.com/ Naofumi

        1. CPU

        Samsung designed their own Exynos CPU. Sometimes they use it, sometimes they don’t. Performance-wise, I haven’t heard that it provides a definite benefit over Snapdragons, etc. This is very different from Apple and their A- series of CPUs. Hence Samsung’s CPUs have not provided them with the differentiation required to separate themselves from the competition which use off-the-shelf designs from Qualcomm, etc. In other words, they are good enough for the consumer, but not good enough to lift Samsung.

        2. Software

        I’m talking about how Samsung is now incapable of differentiating itself from other Android OEMs. This is a result of stock Android becoming better over time. The presence of alternatives within Google’s ecosystem only makes matters worse for Samsung (it’s harder to differentiate).

        3. So what if Samsung’s profits fall?

        The topic of this article is why Samsung’s profits are falling (and why they were high to begin with). It’s not about Android as a whole.

        Jan does bring up the entire ecosystem in one sentence at the end of the article. I’m sure he intends to address it in a separate post.

        What are the broader implications if Samsung really does start to suffer, both for Google and for the broader Android ecosystem?

        I think that Ben Bajarin is seeing this as a large issue, and has been addressing this directly in recent posts (and podcasts). I think his thoughts are spot on, and I think they also fit in with Clayton Christensen’s “law of conservation of attractive profits”.

    • art hackett

      The only “analyst” that actually had a clue (apart from the team @tp), and even predicted today’s mobile situation is Dediu. The rest were/are incompetent or pushed their own interests and never once predicted an actual result or direction of change. They only appear to be attempting to manipulate markets or are totally incompetent.

      • http://naofumi.castle104.com/ Naofumi

        I agree that there is a lot of intentional bad analysis out there. However, the real problem I think lies in the inadequacy of academic understanding and theories. Clayton Christensen and other renown thinkers have been saying quite convincingly that, in fact, our business schools are teaching stuff that makes companies/economies worse off. If so, it is no wonder that a lot of analysts are making wrong predictions. They are simply doing what our schools taught them to do.

        In the current case, I think most frameworks for understanding competitiveness (“Five Forces” for example) are simply too static. They are unsuitable for industries that are going though constant change. They are good for analyzing why a certain segment in the value chain is earning good profits, and whether that is an attractive market or not. However, they do not teach us how we can predict radical changes in the value chain.

        Clayton Christensens work stands out in this regard. It focuses on innovation and how that affects the value chain structure.

  • GlennC777

    If the question is, how was Samsung able to claim such a large piece of Android market share, then perhaps the answer is as simple as the fact that the original Galaxy was the earliest and closest iPhone clone – to the degree that you couldn’t tell the devices apart, except up close. That made Samsung synonymous with “phone I want if I don’t want an iPhone” from the beginning.

    Since then everything seems to have been a matter of incremental execution. The instinct to blatantly and slavishly copy was the catalyst.

    Other competitors were either slower to copy – Blackberry, Nokia, etc. – or a bit shy about copying so blatantly – Motorola, HTC.

    • http://naofumi.castle104.com/ Naofumi

      One thing I do wonder is why Chinese OEMs couldn’t do the same back when Samsung was gaining market share. I think the Chinese actually did copy the iPhone even back then, but for some reason, they weren’t as successful as Xiaomi is now. My question would then be, why wasn’t there a “Xiaomi” back then and why is there a Xiaomi now?

      • GlennC777

        Samsung did have the advantage of being an established brand with immense resources even when the iPhone was new. In fact, much more so than Apple. Among the companies which had that critical mass, it was the only one to go in the “right” direction from the start.

        In fact, there are only two companies I know of which quickly reacted to the iPhone in any meaningful way: Google and Samsung. Though maybe Xiaomi did as well, and others I wouldn’t have known about.

        • http://naofumi.castle104.com/ Naofumi

          Yes.

          My thinking is that back in the early days, having immense resources was a requirement for getting into the game. Within that environment, both Samsung and Google benefited from knowing Apple’s plans beforehand as well as their vast resources. Samsung especially was Apple’s main supplier for many important components, which obviously was an advantage.

          So in the early days, you had to be both a big company and have no shame. Companies tend to become more self-conscious as they grow big so the combination of big and shameless (like Samsung) is rather rare.

          What’s happening now is that smaller or much newer (to phones at least) companies are entering the smartphone business, and that is what is pressuring Samsung in the low end. See Ben Bajarin’s article for a graph ( http://techpinions.com/global-smartphone-vendor-market-share-and-os-installed-base-statistics/31396 insiders only). This suggests that right now, you don’t need vast resources to be successful. In fact, a lean business model that doesn’t spend much on R&D and marketing (like Xiaomi) could be a better match for the current environment.

          • GlennC777

            Agreed. Samsung’s explosive (beyond exponential) growth into smartphones probably required it to be large, for an instant bootstrapping effect provided by an existing base for finance, engineering and distribution. The exponential growth of the newer low-cost competitors seems to have arisen organically, from a much smaller base, but has reached the point at which it is now very large and challenges Samsung.

            But I think you’re very right about the need to be shameless. Samsung is shameless and apparently has been shameless for a long time. Xiaomi may be shameless as well, but they probably have a much lower cost structure, so can probably beat Samsung, and Samsung should be very afraid, because they and companies like them will do to Samsung what Samsung did to existing competitors, not just in phones but in everything.

          • art hackett

            Hopefully the companies that Scamsung destroyed or minimalised on the way up will be able to recover somewhat as Samesung itself is commoditized and copied.
            Couldn’t happen to a more deserving pack of criminals.

  • lrd555

    Do you really copytism? Yes, it’s getting harder and harder for Samsung, these biggest IP thief if not on the top three on the planet, to copy Apple’s products. Not to mention the billions of business they’ve lost from Apple with chips & displays being made elsewhere.

  • Walt French

    Looking at Charles Arthur’s recent note on Samsung’s mealy-mouthed excuses, the “strength of the won” jumped out at me.

    Sure enough, the won *IS* stronger. Quite a bit stronger, in fact, than the 2009–2013 period, in which Samsung overtook Nokia as the largest seller of cellphones, and surpassed Apple in smartphone units.

    Pre-2008, Samsung became a powerhouse exporter and electronics manufacturer despite a much stronger won. But I have to wonder whether the period of exceptionalism was actually driven by the very low costs of production in Korea.

    There’s a time-honored aphorism that investors shouldn’t confuse the market direction with their own investing skill. Looks like Samsung either fooled themselves, or blithely assured its investors and other interested parties, into thinking that their strength was somehow due to that awkward UI customization, or the availability of those tone-deaf wanna-be music, chat and app services.

    When in fact, their generous margins despite competitive pricing were always all about cheap production.