Peak Samsung

Samsung’s Q2 earnings and smartphone shipment volume miss should come as no surprise to our readers. I highlighted the fundamentals of what I saw happening to Samsung in this insider article from last September. Samsung has made very little progress competing with Apple in the high end premium segment of the smartphone market and they are being attacked at the low-mid range by a variety of new entrants. Samsung rightly points out in their earnings release that one of the many culprits to their poor earnings and device shipments is increased competition. That is highlighted by this chart:

Smartphone sales by vendor

Yet the best visualization of what is happening to Samsung is in this chart:

Screen Shot 2014-07-08 at 7.50.15 AM

As you can see, Q2 2014 marks the first quarter since their global rise in smartphones that their line is trending downwards rather than up. This chart highlights Samsung has reached its peak. Samsung is trying to play this off as a short term issue and one they see being resolved with 4G. There is some merit to their logic, however, if they see any rebound it will be short lived.

It is important to note that outside of China, by my estimates, Samsung has around 60% share. Including China, Samsung has 36% share and an approximate installed base of a little over 500m smartphones in active use, again my estimates. I have mentioned this before but there is little to no brand loyalty in the Android ecosystem. Samsung has attempted to make its brand aspirational across the board and as chart number two shows, they succeeded at this for a short period. Keeping this momentum is the uphill battle they are up against.

4G is one area where they can see some rebounding in device sales. LTE is being adopted more rapidly than many initially anticipated. Samsung does have a short term lead in affordable LTE devices in their portfolio. However, that lead will diminish quickly since the markets where LTE is being adopted the fastest, Western Europe, US, and China, are all areas Samsung faces the most competition in all segments.

Differentiating outside of cost will be the battle hardware companies in the Android ecosystem face over the next few years. As I have pointed out many times before, there is little to no loyalty to hardware OEMs in the Android ecosystem. However, with the types of customers who will make up the next billion new smartphone users, I believe even loyalty to Google and their services will be challenged.

All of this brings up an interesting question. What is the “product” in the Android ecosystem? Specifically where are the revenue generating opportunities? As the answer inevitably becomes “not hardware”, the product offered must evolve. This is where the basis of competition will shift in the Android ecosystem. This shift will disrupt incumbents and open the doors to new entrants.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

105 thoughts on “Peak Samsung”

  1. Competition in the Android space! Great for consumers!
    Problem for Samsung. Okay, I’ll take it.

  2. this is the best thing that could happen to the Android ecosystem. A less dominant Samsung is a better android ecosystem

    the good thing about all these is the fact the reason why they doing so bad is not because of Apple since their Flagship Galaxy S5 is doing better this year than the Galaxy 4.
    the reason they doing so bad is because other Android OEM are doing better at the low, medium and high-end segment now something many of us thought were unthinkable not too long ago.

      1. Absolutely

        Having 2 company like Samsung and Apple completely dominate an industry as big as the mobile will be a nightmare for all consumer.

        we need more balance and better competition

        1. We’re not seeing more innovation because of the competition. Samsung copies Apple. Same amount of innovation because only one company is inventing anything new.

          1. and now Apple have to copies Samsung by introducing a IPhone phablet

            what do you think of that?

          2. Let’s talk about it if and when it actually happens, though I’m almost certain that if there is a larger screen-size iPhone, it will have other related innovations (beyond just size) that make it even more useful and satisfying.

          3. That was also true to the Galaxy Note as well

            There is nothing very important that you will able to do on a larger screen-size iPhone that you would not be able to do on a larger screen-size Android

          4. How do you know there is “nothing”? With Apple and other high-end brands, it’s not just about “do” (features) but also “how to do” (ease-of-use). It’s not just about useful (in terms of capabilities) but also about satisfying.

            Regardless, we’ll be able to test the correctness (or lack of) of your assertion if and when it’s released.

          5. How do you know there is “nothing”?( Mark Jones )

            because have been using both system for quite some time to know the real difference.

            Only those who have never used a high-end Android phone like the Nexus would say that the IPhone (ease of use) is that much better.

            In my humble opinion
            The iPhone is a little better in terms of Visual and simplicity while Android is better in terms of capacity and efficiency.

    1. Kenny and Klahanas are cut from the same “choice is always good” cloth.

      It’s not choice that matters, it’s GOOD choices. So long as Samsung is outcompeting its competition, then it was better for consumers and for the Android ecosystem. When others can provide better products and services, then it is better for consumers and Android.

      Better is better, not choice is better.

      1. The arbiter of good choice is the owner of the device. When there is competition in an ecosystem, and there is more freedom to innovate, there is opportunity for disruption “within the platform”. Choice also involves not being beholden to a seller. To some, that’s a good choice.

        1. The pace of Apple’s innovation within a closed ecosystem proves this theory wrong. If you’re chasing excellence to begin with, you don’t need competition to keep you on your toes. Apple’s ecosystem has reached 800 million users, and they’re choosing to enter and stay within Apple’s closed ecosystem. Choice for the sake of choice is not useful.

          It’s like a computer playing a human at chess. There are any number of moves the computer could choose, but its goal is to figure out what are the BEST choices and which ones to disregard. The theory that the quantity of competitors will outperform the quality of one potential vendor is broken, and Apple proves this.

          Apple’s closed ecosystem is clearly outpacing the rest of the ‘open’ market:

          1. It is hard for someone to have an objective opinion when their have an IFan Bias.

            Apple and to some extent Samsung is so dominant because they were the pioneers of the new mobile industry.

          2. Yes, I’m one of 800 million iFans. If you have a counterpoint to make, please do. But don’t write off opinions you can’t or won’t debate by calling people iFans. It’s lazy and not worth the time it takes to type it.

          3. It is hard for someone to have an objective opinion when he/she has any bias that he/she refuses to acknowledge or explore.

            I, and I presume many others here, are not much interested in looking backwards except as insofar it helps me to look forward. So Kenny, given your assertion, how long does “Apple and to some extent Samsung” remain “so dominant because they were the pioneers of the new mobile industry?” Nokia, RIMM, and to some extent Palm, were the pioneers of the previous smartphone era, and they’re mostly dead now. Nokia and Motorola, mostly, of the cellphone era before that. Will we get any advance notice of Apple and Samsung’s fall before it happens?

          4. In this, and other posts, you come across as someone keeping score and rooting for a winner.

            We have been on the iPhone from the beginning through the 4S.

            Say what you will, but in my household Apple has lost. That’s the statistic that matters to me. Right now Android is winning in my house, with some consideration being given to WP8. We have no loyalty, and we don’t care which manufacturer wins. Why should we?

            I don’t like having to be allowed to use alternate keyboards (or any other app). I don’t like not having a memory slot. I don’t like not having access to a filesystem. I don’t like having to shop at a single store, or any store for that matter. I don’t like an unwanted IT department.

            I like that Android has several models with different features to choose from. I like that anyone can write an App and sell it, or even email it and the user can install it.

            It’s okay if your choices are opposite mine.

            BTW, please stop throwing the 800 million number around. It actually is smaller than the Android installed base. By a lot. All that proves is popularity.

          5. The 800 million number is important even though it’s less than the Android installed base, because it is most likely sufficient to support a thriving third-party ecosystem. It has nothing to do with popularity (Why do you even mention that?). It seems to be a solid counterpoint to the very lazy, but oft-repeated argument that there-will-only-be-one-ecosystem-winner-in-smartphones-just-like-there-was-in-PCs-and-it-is-Android.

            Most, if not all of us, are not rooting for winners. We are interested in intellectually-honest and respectful debate about theories (on competition, business models, technology, etc) and the potential evidence/data that might prove or disprove them. We have little use sloppy, lazy, opinion-but-no-data arguments that sound like they come from the minds of 12 year-olds.

          6. I don’t disagree with you at all, and thanks for replying.
            I mentioned it as a rebuttal to a clearly partisan boast. That statement, the entire reply, was to answer the very evidence which was presented as a “closed has won” argument.

            Edit: It was also keeping previous statements from the poster in mind.

          7. ‘When there is competition in an ecosystem, and there is more freedom to innovate, there is opportunity for disruption “within the platform”.’

            That’s generally true, but not always, and the inverse isn’t made false by it being true. Having lots of choices among unsatisfying products within an ecosystem is mostly not good. Although it allows for rapid learning from mistakes, it can also drive burnt consumers away for a long time. It also depends on the ecosystem owner/controller, and its values/drivers. A closed (i.e. less competition, less freedom) ecosystem might improve/disrupt at a slower pace, but with the persistent/driven owner, it allows technology to fully mature and then get added into satisfying products. (Note that Apple’s ecosystem has competition from outside of it in Android and others, so there is urgency to improve.)

            And I think we’re finding that it depends on the stage of technology as to whether integrated or modular products provide sufficient (or better) user satisfaction. Ultimately, user satisfaction, not just choice, is what matters.

          8. “the inverse isn’t made false by it being true.”

            It’s just as generally true that when there are obstacles to innovation, or when an innovation needs “permission” to exist by a potential competitor (the owner of the ecosystem), an innovation may not be attempted, or may not be allowed to come forward.

            How long did it take for alternate keyboards in iOS? Still not there. Why not?
            When the original iPhone didn’t come with a Bluetooth profile for a keyboard (as all PDA’s of the time did), why could someone simply not write one? We both know that answer.

            Edit: Arhrr. It’s late. I think we agree on the user satisfaction part. That’s why I said earlier, that the owner is the arbiter of “good choice” or not.

          9. Apple claims it’s because of security and privacy for the user. In iOS 8, Apple will still not have completely solved the problem, as certain inputs will still require switching back to Apple’s keyboard.

          10. But in so doing, they are choosing for the user. Most of their users like that (I think), some won’t put up with that. I’m the latter. ๐Ÿ˜‰

          11. The creator/architect/designer/builder of a product always makes choices for the users. That’s why they and not the users, are (really, hired to be) the expert product designer. In most cases, the designer leaves some choices to the users (thus, settings or preferences), but its only a matter of degree.

          12. “it’s only a matter of degree”
            Especially true in hardware, unnecessary it software. Software is supposed to be versatile and unimpeded (within the law) IMO. Just like thought and speech.

            One company can’t do it all, which is why from a HW POV, Apple is the least diverse. It’s “Bell Curve” of device diversity is a sharp vertical line (okay, a sharp peak). On other previous systems, and all other current ones, there’s a large diversity of models and features to choose from. No one needed an outside company’s blessing to develop them. I like that.

          13. I guess we should agree to disagree. On hardware, I agree Apple is less diverse but there are also resulting benefits. On software, for example, it’s the “unimpeded” attribute that leads to CPU-sucking virus checkers and malware removers. Apple creates software boundaries, and within those boundaries, there is competition, innovation, and diversity. Android and other OS options provide further diversity for those who want it, such as you,

          14. I think I can pleasantly agree to disagree with you. You raise honest, rational, points devoid of spin.
            Well done my friend.

          15. The problem I have with many of you is when you are using the (Wintel) Windows Era as an example of competitive innovation, which could not be further from the truth.

            during the Wintel era there was almost no competition at all
            it was just Microsoft and Intel making money Licensing bad product to OEM which in turn could make Low margin bad product regardless of the experience to the majority of consumers since there was no other alternative.

            the price of many components where still very high,
            computer was more of a Business Market rather than a consumer one, and less of a necessity compare to a smartphone.

            The price of entry for any OEM was astronomical.

            there was no way a company like Xiaomi, One + One or Amazon fire, Micromax would’ve exist during the Windows Era,

            Now compare that to the new Android Era.

            Android is a fantastic OS if not the best, very well build well design, from top to bottom, by one of the best software and service company in the planet.

            any startup and small OEM can use it with or without Google nor any price tag to make a wonderful experience for any target audience hence the success of many new entry such as Amazon, Xiaomi, Micromax or even the company that just created the Black Phone etc..

            I do believe that no matter what happen during the next 10 year Apple will still be a very successful but not so dominant company, the same is also true for Samsung.

            Android will enable a lot of Startup to create specific Phone for a very well Target audience as the Black phone is doing now for those who want security. that could disrupt huge company as IPhone business Model

            many country such as China, India might introduce legislation or doing political stuffs that favor their own Local industry primary in China at the expend of Foreign company as Apple hence the advantage of real competition.

          16. I had no issues with your post other than the BTW part. My second paragraph was mostly influenced by Kenny.

        2. But when this kind of competition leads to everyone effectively offering the same thing, what kind of choice is there, really? Looking at the Windows PC market as a parallel, when the only thing left to compete on is price, everyone is offering the same thing. That’s not really choice, is it?


          1. So well said jfutral. There are many parallels to the PC OEM’s and Android OEM’s Both seem to be on a race to the bottom so any choice the user will end up with will be on price as that is what that market puts 1st. Compare that to what Apple makes and does you see that their buyers want and are willing to pay for the best. They still do care about price but they do not put it 1st on their list. This lets Apple provide a better experience for the user starting with the design of the product to the software then to the purchase experience all the way to the time that you are done with the product.

          2. Sometime i find that very strange for so many techthusiast to be so close minded and lack imagination when it come to potential and opportunities in the Mobile industry, which may explain why a lot of analysis often think that the next 10 years will always be similar to the last one or declare that the OS war is over when there are so many potential for disruption

            Here is just an example of disruption that could impact the mobile Landscape in the Future


          3. I agree. The amount of lack of imagination and close mindedness in the tech industry is astonishing.

            Although, I can’t for the life of me figure out what that link has to do with current discussion.


          4. But when this kind of competition leads to everyone effectively offering the same thing, what kind of choice is there, really? ( jfutral )

            don’t you think that it is a lack of imagination on your part to think that real competition can only leads to everyone effectively offering the same thing.

            i provided you a link of what real competition can lead to

            did you read it

          5. “don’t you think that it is a lack of imagination on your part to think that real competition can only leads to everyone effectively offering the same thing.”

            I said nothing about real competition. My point is that what is explained in the article and trumpeted by you and klahanas as “choice”:

            “this is the best thing that could happen to the Android ecosystem. A less dominant Samsung is a better android ecosystem…the reason they doing so bad is because other Android OEM are doing better at the low, medium and high-end segment now something many of us thought were unthinkable not too long ago.”

            is not choice. This is only resulting in everything being effectively the same, even across price points.

            What is happening to Samsung is not happening because of “real” competition creating anything different. It is happening because everyone is now able to create the same thing. That’s not choice. And, honestly, I think your link shows exactly the problem, no one in the Android ecosystem is creating anything different.

            Amazon looking to shake-up and re/define e-retailing may be a glimpse of the future and an interesting one at thatโ€ฆ for Amazon. Not Android or the consumer except by creating less friction to purchase from Amazon. Not anything that creates real competition.

            I’m still waiting for real competition in the Android ecosystem to actually provide real choices to escape the gravity of the mean that has gripped the Windows PC ecosystem. I’m not saying it can’t happen. It just isn’t.


          6. This is why i also said that many of you are really close mind, and show an intellectual laziness.

            Innovation is not only about Feature or Look and Feel more often than not it is about Business Model, Marketing, Timing, PR, and even Politic

            What is happening to Samsung has more to do with the Success of company as Xiaomi which come up with a new innovative Business Model around Android that give a big blow to Samsung and Apple when it come to their potential for growth in China than anything else.

            The problem with many of IFan is the fact that many of you think that the average customer is as Loyal to Apple as you are which is a fallacy

            the average customer is only Loyal to the company that will provide them with the best product experience for its money and what we think is the best experience today may not be as valuable to the next wave of consumer as it is for us hence the issue that even Apple acknowledge themselves in their email during their trial.

          7. First, cut with the ‘iFan” crap. Most everyone who posts here, regardless of product preference, deserves more respect than that.

            Second, most who post here don’t assume any such thing as “the average customer is as Loyal to Apple as you are”. Most people I’ve seen who post such a position do so on the shoulders of data such as user satisfaction and usage stats. If you have a problem with that position, take it up with the data, not supposition.

            Third, I’d really like to hear what you think is so innovative about Xaomi’s model? Seriously.


          8. 1 – The reason I said IFan is because many of you seem to be incapable of making an argument that is not derived from an Apple Playbook

            2 – data such as user satisfaction and usage stats is not a guaranty of Future success, customer taste and need or demand for satisfaction is infinite and changeable hence the challenge for those who rely on it as their only competitive advantage.

            3- their business model, their Value network which is very Flexible and disruptive to any big Player as Samsung and Apple in china.

          9. 1 – So what? It is still disrespectful.

            2 – No one said otherwise. That doesn’t change the data and the fact that few here assume others are as “loyal” to anyone as “you are”.

            3 – Could you go into more detail? I really am curious. How is their Value network more flexible?


          10. 3 – Their flexibility comes from the fact that they do not rely on traditional distribution network, huge marketing budget nor any carrier support to succeed, and still provide a premium product at half price in the market while maintaining a customer satisfaction that some said is even higher than Apple itself.

            this is what real competition can Lead to, and it’s a miracle

          11. Primarily in China and also many other Asian country such as Malaysia Singapore Vietnam, Philippines, Africa if i am not mistaking

          12. Like I tell artists, the process is interesting in its own right, but in the end the work has to stand on its own for itself. Is this ultimately making a product that is all that different than what Samsung is selling? Do they have their own ecosystem so they don’t have to rely on Google as much as Samsung does?


          13. No, but it is the illusion of choice, and that is what seems to matter most to the ‘choice!’ crowd.

          14. There are a plentitude of choices in the Android hardware arena. Models with SD cards, models without. Models with keyboards, most without. Different size models. Different skinned models. Models with removable batteries. Models that wirelessly charge. Those are real choices, that exist right now.

            When everything equalizes, within a class, then lowest possible price is good for the buyer.

          15. “When everything equalizes”

            Thanks for confirming my point. Competition on price and ornamental features don’t really offer choice, that just different windows (pun may be intended) looking into the same room. Just like PCs went through IBM, HP, Packard Bell, Gateway, and Dell Android is faced with the same thing. No one is really offering anything different. And in the end it will be another revolving door of who is on top today.

            You talk about being pro-technology vs being pro business. This equilibrium is not a model for pushing technology forward and offering real choice. In my eyes, this is when the customer loses, when people can’t either because of lack of imagination OR lack of profit, find new ideas. When the hardware OEMs can’t afford their own research, they are left with one sourceโ€”Google or MS. Right now I give the edge to MS. For all the failings Windows 8 exhibits, at least they were trying to offer something different.

            I still hold out hope that Amazon can develop a real alternative from the typical Android mediocrity but somehow they either keep going unnoticed, don’t care, or something. They are the only ones that have had a modicum of success offering something beyond just the hardware.

            For all you offer as real choices, it is still all the same.


          16. The choice is the class of device. You cannot equate an Atom or ARM based machine with a hexacore i7 beast.

            Within a CPU class, you still have class influencing features that you can choose to pay for, or choose not to pay for. A TPM with fingerprint scanner is a feature for some, and a useless option for others.

            Upgradability and serviceability is important to some, useless to others. Versatility, on desktops at least, negates any one manufacturer needing to build everything in. If someone innovates on a peripheral, or in software, you just install it. It also negates you having to lay out the money, all at once, at premium pricing, to bring the system where you want it. There are fewer immovable parts in a versatile system than a monolithic “comes as is” device.

            One of the most outrageously priced computers I’ve seen is the 27 in. iMac. Totally non-upgradable, lame CPU for the price (i5), $2000! Do you know what $2000 can buy when not committed to a single manufacturer? But as they say “no one got fired for buying Apple!”. ๐Ÿ˜‰

            The uniformity, and isolation, within the Apple ecosystem is actually touted as a feature. For many that’s true. For other’s it’s not. Imagine what kind of machines, good and bad, would be possible if there were a licensed version of OSX. I can tell you one thing, they would cost less. Why do you think there’s no possibility of a mid-tower iMac?

          17. “Imagine what kind of machines, good and bad, would be possible if there were a licensed version of OSX”

            We’ve already been through that exercise. They were less expensive, but ultimately no different. And, just like the Windows and Android OEMs, dependent on one company for anything that means anything.

            No _real_ choices.


          18. So being able to put together a Mac with a hexacore i7, ssd drives in RAID 0, 32 GB of RAM and dual NVidia GPU’s for about the same price (or less) of a 27 in. iMac would be the same?

          19. If you take away everything else that Apple provides the consumer, not just in the form factor, then yes. That’s just speeds and feeds. In terms of what someone who would buy that iMac would use it for, all those numbers are pretty much meaningless. There is nothing that your list of hardware provides the person buying the iMac beyond what is already offered.

            If Apple only existed to sell the most PC _machine_ for the money, your point would make more sense. Ask HP, Gateway, and Dell how that went for them. Even now, post those companies, the PC is still the same. The customer is not benefitting from choice because there is no real choice. Everyone is offering the same thing because no one can afford to offer anything different. That helps price, but don’t kid yourself that it helps choice.


          20. Okay then, where can I buy the device I just described, self serviceable, from Apple, at any price?

          21. In the context of this discussion, if all you are choosing from is variations on a theme, how is that real choice? Again, you may be looking through a different window, but it is the same room.


          22. -Yeah, it’s just a ‘puter…
            -No it ain’t! Just ask Goldilocks, that one is “just right”!

          23. Exactly! The fairy tale narrative of choice, first with Windows PCs, now with Android.

            I would argue, however, that before Android there _was_ real choice from diversity in the cell phone market. There was iPhone, Blackberry (no one seems to remember that Blackberry sales and share actually went up the first year or so of iPhone, rising waters and all), Symbian, (I can’t remember if Palm had thrown in the towel yet), Windows Mobile, and a good selection of feature phones for those who don’t need or want a smartphone. Those were all very different phones. Real choice, efficacy of any particular brand not-withstanding.

            Then Android hit the market and most everyone went the route of iPhone knock-offs. Not sure why no one went the route of using Android to copy Symbian (the global market leader at the time), or Blackberry (Android’s first target), or even Windows. Everyone jumped on iPhone and any minuscule variation they can think of to try to claim differentiation. And that’s where we are today. Just shows the lack of imagination of most cellphone technology companies.

            I do agree with Kenny, and have always held out hope (false as it may seem) that Amazon might actually do something different. They are the only ones trying, even if only half-heartedly.


          24. I would have choice. I could always put Linux on it and triple boot OSX, Linux, and Windows. Sounds like a choice to me…

          25. Sure, just not in the hardware. At that point it is all the same, just variations on a theme.


          26. You know, several times I typed regarding this point, the only real choice in PCs is between ecosystems, not the hardware, but I kept deleting it thinking that was too much of a D’uh. At this point, even with Mac OS X as part of the mix, the hardware itself is interchangeable. My brother just bought a Surface Pro he is planning on turning into a Hackintosh. I have several co-workers who have already turned their PCs into Hackintoshes. This is my point, in hardware the choices are superficial and not really choices. You have to have a software integration that makes the difference. Even those Hackintoshes have limits to how much they can incorporate into the Mac ecosystem.

            Unfortunately, (or fortunately, depending on how you swing) the same has not happened on the smartphone front yet. So at this point within the Android ecosystem, it remains, no real choice as the race to the bottom continues.

            So getting back to Ben’s point, the differentiation will not be in the hardware. There are not choices there. It is all the same.


          27. Or as Ben put it:

            “All of this brings up an interesting question. What is the ‘product’ in the Android ecosystem? Specifically where are the revenue generating opportunities? As the answer inevitably becomes ‘not hardware’, the product offered must evolve. This is where the basis of competition will shift in the Android ecosystem. This shift will disrupt incumbents and open the doors to new entrants.”


          28. Ben discusses the business side of things (who’s Ben?). Since I don’t care much about that, I don’t have much to say about it. It’s not my obligation to make any company money, though I invariably do. Both voluntary and involuntary.

          29. Until we live in a post-monetary economy, however, what a business can make money on will directly affect what you can buy and whether you will have the money to buy it. Which I am all for, BTW. I would much rather we value things for their intrinsic worth rather than a monetary measure.


          30. My biggest concern is, will the company be around for the lifetime of my device. And it stops there. If they can’t make a good product at a good price then I won’t buy. I don’t think we have any shortage of things we can waste our money on. If Samsung goes under, I will uncaringly buy from someone else. In fact, I currently do.

      2. Hum i disagree
        when it come to Samsung and even to some extent Apple is not necessarily a matter of good choice in itself, but rather logistics, marketing and Carrier relationship that has been their biggest advantage.

        1. FalKirk is right. Better is better, not choice is better. For a perfect example have a look at your typical remote control. Most of them suck but we live with them because they are what comes with your equipment. Jamming a ton of buttons on a remote that you can choose to use or not use is bad design. Good design says what is the minimum that I need to function and go from there. Many of the buttons on the standard remote could be replaced by a good fast on screen user interface.

          Yes, logistics, marketing and carrier relationships are all important but the smartphone the end user ends up using is more important. The rest is just what keeps it going. An analogy with the movie business is when a big budget film gets maid, distributed but tanks at the box office even if it goes in to wide release (lots of screens & showtimes) The moviegoer in that case either went to see another film or chose skipped going out all together.

  3. Does it make sense to look at Android as two distinct and separate platforms? Android 1 is the platform Google controls and profits from and Android 2 is the platform China manufacturers control and profit from. In calling Peak Samsung can we also extrapolate to Peak Android 1 (looking at the smartphone segment)? Interesting implications for Google, if true.

    1. Of the 7 billion people in this Planet China represent only 1.5 Billion, and as of Today Google only have 1 billion consumer on their android platform,
      having said all of that,
      do you really think that your Peak Android 1 Story make sense?

      Google doesn’t have to be on any android phone to be very successful, also not All OEM need Google services to provide a good android experience to their customers which by the way is the beauty of Android Open Platform itself.

      1. Moving forward, it looks to me like most of the Android growth for smartphones will be on the Android 2 platform (yes, including Amazon devices). Google does not benefit from this growth nearly as much as it does from the growth of Android 1. Many people look at the growth of Android and assume that Google is benefitting regardless of where the growth is coming from.

        1. As i said already Google doesn’t need to be on all android phone to be very successful

          Also with 1 or even 2 billion customer using Google service without taking into account the web do you have any idea of how huge this number is and the potential of an install base such as this.

          use your imagination

        2. I’d wager that Google moves further with Android 1 (aka Android One) by driving costs down, moving the price of non-premium smartphones closer to zero. This is what Google wants, anyway. All of the smarts will happen in their cloud, which is where the value will lie. Therefore it will be increasingly difficult for Android 2 OEMs to compete without completely replicating Google’s learning machine. As that advances, the value proposition delta will increase between Android 1 + 2 to a point where 2 becomes essentially unviable.

          1. i do not believe that Google really want to destroy their OEM partner by driving the Price of phone to Zero, they would have done that already with their Nexus Line

            with or without Google the Android 2 OEMs will continue to innovate and provide good Smartphone in area where internet penetration is still very Low.

          2. I don’t think Google cares about the OEMs in all honesty. For now they are useful. They can’t drive the price of the Nexus to zero because the economics aren’t there. But imagine in 5-7 years when they can offer a Nexus quality device at $0 subsidized by their ad/services business. Once the economics are in place I certainly wouldn’t put it past them at all.

            For Android 2, true, but what about when internet penetration grows? Do those OEMs still offer a compelling experience? Curious…

        3. Being Open means that it’s going to be on a whole lot more things than any closed proprietary OS. Don’t forget it’s the full Linux Kernel at it’s base complete with integrated userland and hot pluggable drivers, frameworks, etc. Like going to 64bit has already been supported along with touchscreens longer than any OS. Touchscreens were supported for Kiosks and Banking Machines in the 90’s. That’s we had Linux running touchscreen PMP’s and UMPC’s since around 2002 to 2004.

          So naturally Android can run on both touch and non-interfaces, open box or closed box systems on tiny screens to laptop and desktop screens to no screens and just an embedded system that hooks your car up to the cloud. With whole new platforms being launched now. Android is anything but done growing.

          We have the new Wear Fit platform running on MIPS, Intel, ARM… and other low power platforms running Ultra Low Power chips. Apple will be on one and nobody is sure they can even get a chip shrink size smaller than what we’re already seeing from Imagination’s MIPS or Ineda for Android. Ineda alone has prototyped chips capable of going for a month between charges. It’s also MIPS based like Imagination’s! …..if you think you’ve seen the best of Samsung and other Google Wear OS embedded Wearables You’ve got another thing coming. Glass alone will be hard to beat in actual comparisons of it’s computing parts!

          Samsung alone is expecting 400 million sales this year of just smartphones and they are already half way there! Just saying if Samsung is growing market share by 100 Million over last year’s projected 300 Million (actual numbers 315 Million), Google with all other OHA members will also sell more than last year too!!!

    2. I think it does. The only correction I would make in your segmentation of Android is that Android 1 is the one that comes loaded with Google Play services and Android 2 is the AOSP (Android Open Source Project) and that should also include Amazon’s Kindle Fire OS and not just Chinese Android OEM’s.

  4. “outside of China…Samsung has around 60% share. Including China, Samsung has 36% share”

    Either I am mis-reading that or the numbers are not adding up. China represents about 30% of the smartphone market, so if Samsung has 60% of the remaining 70% of the world, they have a minimum of 42% of the entire world including China.

      1. with more than 600 million smartphones sold worldwide by Samsung, sometimes I wonder why they have not thought about buying a startup as LINE Chat and even Dropbox and integrate them with their Knox security feature to provide as an exclusive default services on their smartphone.

        Asian company are notoriously known for their lack of imagination and agresiveness when it comes to software and services integration except perhaps Xiaomi

  5. Samsung got pretty far by copying Apple, but the party is clearly over. Frankly, they don’t have the design chops or imagination to develop what comes next. This company is only capable of copying the example set by others. If you want to know what’s coming next in mobile, Samsung and its Android OEM brethren have no idea. Steve Jobs was right about Android being a stolen product. Who better to adopt a stolen product than a company built on plagiarizing other’s hardware designs?

    1. “but the party is clearly over.”

      I wouldn’t go that far. The high margin android phone party is ending, agreed. Price wars are going to ensue and we’ll be left with an Android phone market that looks a lot like the windows PC market — very low prices, very similar hardware, extremely thin margins.

      Given that, Samsung has two very big advantages over many of the other manufacturers out there: they already have deals struck with most of the existing wireless companies, ensuring that their phones are going to be in every single phone store. That’s a big structural advantage and it will take quite a bit of effort for any other phone maker than maybe Nokia to overcome it. And second, they own a much bigger chunk of their own supply chain than any other phone maker I know of. Samsung makes its own displays, its own flash, and while they license other companies’ CPUs, IIRC they own their own fabs and can make their own chips. I assume they make their own circuit boards as well. In a world of low-profit phones, having so much of the phone built in-house is going to give them a significant ongoing cost advantage.

      On the other hand, Samsung seems to be allergic to making a phone that is pretty or well built. In a world of near-identical phones all priced very similarly, I think individuals who can afford to do so will gravitate to phones that are well built and attractive. Any maker who can make a price-competitive phone (say no more than 10% more expensive) that isn’t made of cheap-feeling plastic will do well as long as they can manage to get those phones into stores where people will see and feel them.

      1. What I think you are saying is that Samsung will not be beaten by any similar global player like HTC, Motorola (Lenovo), and I totally agree.

        The competition that Samsung is now facing is not the same as it was several years ago. The competition are local companies who outsource R&D and production (and/or buy ready-made components from MediaTek, etc.). They aren’t necessarily “tech hardware” companies, but could have completely different business models. A cost advantage alone may not be enough to fend them off. In some ways, they are asymmetric competition.

        The situation looks to be really complex, and fun to watch.

    2. Thats right. We are seeing this with all of these silly Android SmartWatches. As Android OEM’s do not have Apple iWatch designs to steal from they keep making junk that does not work right and will not sell in any meaningful numbers. A perfect example of Samsung’s commitment to quality is here:

      This reminds me of exactly the same nonsense garbage you get with Windows PC OEM’s and their standard power adaptors connections. It was up to Apple to invent the superior MagSafe connector that has solved a problem many users of laptops did not know they had until it was too late and they had a broken laptop because of bad design decisions. You have to wonder how many PC laptops where thrown away because it was not cost effective to get them repaired. So once again, you get what you pay for.

      1. iWach will be as silly but iSheep will keep bleating “revolution, revolution”.
        Happened before – it will happen again.

        1. About the iWatch, We do not know if there will be one as Apple has not announced anything yet. So it is way to early to say how anyone will react to a product that does not exist. Also, you seem to think that people who like Apple will buy anything that they produce like iSheep. You are wrong as there have been a number of things Apple has done that have not been the best and have been hated by the Apple (iSheep as you call them) community.

          Of course those products are from the past and they have been on a good run for now but there are no guarantees that every new product they put out will be a winner. For most people who purchase Apple products are not iSheep/iFans they are people who want to purchase the best product for them. If enough non tech/normal people like what Apple is selling, great. If not then the product will be a flop.

          About those poor souls that where electrocuted by iPhones. I assume you know that they where using cheep 3rd party knockoff chargers that where not built with the correct parts. To blame Apple or any company with what a buyer does with 3rd party parts does not make any sense. The fault lies with the maker of the chargers. They took shortcuts to make sales and made substandard parts. They are the ones people should be angry at.

          1. Completely agree regarding the third party charger comment.

            You have to admit though…there’s reasonable chance that there will be lines out the door to buy the iWatch on launch.

          2. Thanks! Yes. The charger issue is just like if someone got mad at HP when a 3rd party ink cartridge jammed up their printer. The problem is that with that logic leads HP in to making it impossible for you to use 3rd party inks to protect their brand and support staff. So we end up with less choice in the end because some people are not willing to accept responsibility for making bad choices to save money.

            I do agree that there is a really good chance that there will be lines out the door to buy the iWatch on launch. But here is the thing, It is not the launch day sales that will make or break the iWatch. It is the ongoing sales that are important. That will determine if it is going to be a success or a failure.

          3. I understand HP’s desire to do that, but if you want to use 3rd party inks (HP prices are ridiculous), you probably won’t get an HP. Lose/lose for HP. The question is how much.

            They should also send the repair bill to whoever sold them the ink.

          4. I agree. The prices HP charges for Ink is insane. This is why when I talk to my clients that I always discuss consumables (ink) with them to make sure they are going to be ok purchasing 1st party supplies. If they are looking for less expensive options then I will have them look at printers that do not have as much of a problem with 3rd party inks. HP can keep their prices up for their ecosystem of printers, ink and paper if they like but they are not the only game in town for printers as many of the other brands make printers that are good enough that is where many people will go.

            As for sending the repair bill to the people who sold them the ink. I wish it was that simple. Most times it does not make sense to repair printers as they are so inexpensive to get new ones that it is better to just eWaste the printer. Not only are the prices keeping low but the features keep on getting better. Things like built in WiFi, AirPrint, Google Cloud Print and others. Plus the UI’s are improving as well. No more silly (PC Load Letter) error messages when you want to print your TPS reports. lol ๐Ÿ™‚

          5. The worst part is when there are country restrictions on their cartridges, too. My brother lived in Germany for a while and couldn’t use German HP cartridges in his US HP printer.


        2. I’m no Apple fan here, but don’t confuse facts with your uninformed opinions. Those “poor souls electrocuted by iphone” were killed because they used cheap knock off chargers that probably would have killed anyone with an aluminum/metal phone.

          If those same people soldered two wires to their iPhone (or any phone), stuck the wires straight into an electric socket, then got electrocuted — would you say that the phone was at fault?

    3. Sure, if you religiously believe everything Jobs said.

      I guess, that is why Samsung patent portfolio is 20 times (10 times considering only mobile business) the size of Apple patent portfolio (even if you include rounded corners, fancy effects and a feel as Apple patents)
      I guess that is why Samsung spends 3 times more on R&D than Apple.

      SJ was a pathetic prick who considered himself as the sole inventor from whom everyone else is stealing.

      1. And yet with all those patents and all that money spent on R&D they couldn’t have conceived of an iPhone without Steve Jobs and Apple. Amazing.


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