These days Samsung is a mobile behemoth — with a bit of an earnings problem. The company reported its lowest profit in three years, a drop of 60 percent to $3.9 billion. It’s a huge stumble but, as the astute among you will note, it’s still $3.9 billion dollars in profit.
Two things are happening at Samsung. We forget that in 2009 Samsung was a minor contender in the mobile space. Nokia, HTC and LG were duking it out as Apple released their iPhones. There was no inkling that this battle would one day end with Samsung victorious. In fact, most of these smartphone makers weren’t even dedicated to Android as a platform. For example, the LG Prada II came out in December 2008 and that was as far from a Nexus S as you can get. A year later Nokia released the N97, its last gasp in the Symbian space they seemingly refused to abandon.
So the first thing Samsung is doing is maturing. It settled into a complacency that comes with success and, like Apple, it’s circling around a set of design decisions that may or may not resonate with consumers. You can’t make a phone that isn’t a flat black slab; you can’t make a wearable that isn’t somehow related to wearables that came before it; and you sell expensive phones to early adopters, ignoring the low end. Both Apple and Samsung followed these maxims to the state of affairs we see now.
The second thing Samsung is doing is reacting to a rapid change in the market. We are at peak smartphone. We are currently living in a world where almost anyone can own a networked device, from a $35 Firefox phone to a $3,000 secure phone. Xaiomi is flooding the design-conscious Asian market with iPhone-alikes while Lenovo is plugging deeply into the low-end. And all of these phones are essentially the same.
Samsung has historically sold on features. By plowing in heart-rate sensors, weird cameras, and waterproofing. Every phone has to be considerably better than the last and so they pile on photo modes and other oddness until the interface feels like a copy of Internet Explorer with a few too many toolbars installed. In the end, what consumers want are phones that are cheap and can play Candy Crush. And flagship Samsung phones are not cheap nor does Samsung own Candy Crush.
So Samsung is both sliding into home and sliding. It is both victorious and fragile, and the world it faces is far different than the world it won in. Smartphone choice is always a no-brainer — you buy what you can afford — and most smartphone pricing reflects that. You can get cheap or free phones that are a few years old, middling phones for a few hundred, and flagships for $300 or more. By winning so handily in the high end, Samsung ignored the other two tranches. This resulted in a drop in interest and, more important, the ability for Apple to sneak into the big phone space almost unnoticed.
While I’m sure Samsung won’t let this slide happen for much longer, we must remember that, once upon a time, Nokia was the brand to beat when it came to smartphones. Now it’s not even a brand.
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