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Is Samsung too dependent on Android?

By Reuters

Posted on 3 May 2012 at 14:37

For example it last year introduced its own Android software store, Samsung Apps, which has about 40,000 apps - a handful compared to Apple's 500,000 for the iPhone and 450,000 for Android. And last month it announced its own mobile advertising service, AdHub Market, apparently competing with Google's own ad distribution network - its main source of revenue.

And while all but a fraction of Samsung's smartphones are currently Android devices, the South Korean group has said it is committed to creating devices for different operating systems - what it calls a multi-platform strategy. Analysts said this has so far been half-hearted.

They've tried to beat the drum for bada, but it hasn't had much traction

It has an operating system called bada, for example, which was on fewer than 3% of the world's smartphones last year, according to Canalys, putting it ahead of Microsoft's Windows Phone. But that's nothing compared to Android, which was on nearly half of all smartphones shipped. "They've tried to beat the drum for bada, but it hasn't had much traction," said Jake Saunders, a Singapore-based analyst for ABI Research.

Alternatives to bada

Samsung says it plans to introduce more models, but has also said it may roll bada into another operating system called Tizen, and is in any case building an ecosystem that would improve compatibility between the two systems. It was keen to stress, however, that while Android was an important part of its strategy, phones running Windows and bada operating systems were equally important. Given that bada and Windows phones account for less than 5% of Samsung's total phone shipments, it suggests Samsung will give greater weight to Windows and bada phones in the months ahead.

But these are small steps given the scale of Samsung's dependence on Android. Samsung, said Ovum's Cripps, is keenly aware of the need to shape a broader strategy. "Especially in the last year there's been quite a lot of thought internally about which way they go with this."

If it wants to avoid merely competing at the bottom end of the market with ZTE and Huawei, analysts agreed it must develop an ecosystem that embraces software, content, other devices and all the players that help make that happen. This would inevitably pit it against Apple, Amazon, Google and Microsoft. All have different business models, said Cripps, but the same goal: to "own every element of the consumer's online and mobile experience."

In some ways, Samsung is well positioned for this. "Samsung is not just a phone maker like HTC so it does have the potential to create platforms which deliver content and web services to TVs, PCs, phones and media players, and connect them," said Caroline Gabriel, research director at Rethink Technology Research.

This is Samsung's competitive advantage, said Gabriel, as the world shifts more to web-based technologies like HTML5, which reduce the relevance of individual operating systems and platforms like Apple's iOS and Android. Instead, applications will be more like web pages, which can run on any device.

Samsung can draw on its extensive supply chain, manufacturing capability and research and development facilities to make this happen, Gabriel noted, but its challenge is to overcome silo-like systems within the company and to learn how to develop relationships with the outside world.

"Samsung has no track record of building a developer ecosystem and even in the web that's going to be a challenge," she said. "It may have thought Google would be a solution, but Google is too controlling."

Deeper changes

It also requires deeper changes, said Ovum's Cripps - not only to be the first Japanese or Korean company to break into a world dominated by U.S. players, but to succeed where once- dominant players like Nokia, RIM and Microsoft have stumbled. "I can well understand any doubts they may have internally about how they should push ahead with this," he said. "It is genuinely very, very difficult."

Samsung has made some tentative steps, for example into wedding its Smart TV business into partnerships with content providers. And developers like Singapore-based Jon Petersen say the company has put out feelers to outsiders to help work on software applications - in apparent recognition of its own weaknesses. Such weaknesses were visible even with the app it published ahead of Thursday's S3 launch: almost a third of reviewers gave it the lowest rating, complaining it didn't work properly.

For now, no one denies Samsung's pre-eminence. "The zeitgeist right now is definitely towards high-end Android devices of which Samsung is clearly the leader so I don't think there's any instant danger," said Cripps. "It's more a case of what Samsung wants to be in five years' time and planning towards that."

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User comments

Own every element of the experience

This is the fundamental issue. Lock-in maximises return but deprives consumers of choice. As the article seems to be analysts giving soundbites, I'm not going to delve deeper - but just say; "Linux".

By dubiou on 3 May 2012

Korean Mindset rules

Samsung has made a success of making money off the back of other people's technology. Why would they change now? From TV sets, to monitor screens, to PCs and phones, they have just done what Koreans have done for centuries - led the Asian copyshop brigade. If phones get too difficult, they'll move onto the next 'Big Thing' without blinking.

By SwissMac on 3 May 2012

@dubiou

In what way does "Lock-in" deprive consumers of the choice of a simple, working device and ecosystem? If there were no such environment around, that would be one less choice for consumers - that of a system they don't have to worry about! lol!

By SwissMac on 3 May 2012

@SwissMac

Samsung are innovators as well not just copiers. We have them to thank for the design and patenting of computer memory (DDR, DDR2 and DDR3, with DDR4 around the corner).

Samsung also invented and patented many of the modern screen technologies we rely on today, including key parts for LED backlighting, OLED's and AMOLED screens used in smart phones. Plus emerging technologies such as flexible screens.

Also lets not forget that many of the key parts of Apple devices are licensed from or are supplied directly by Samsung. Without their innovation and hugely successful fabrication processes there would be no high-resolution screen in the iPad 4!

By skarlock on 3 May 2012

Stupid

Stupidest article ever.
All these different manufacturers providing different phones with the same OS gives us consumers a huge variety for what we actually want with all our software switchable between devices.
Different OS's just hurts US the consumers.
There's still profit in the PC market otherwise companies wouldn't still be making PC's.

Samsung shouldn't be looking at making their own OS, instead they should be looking at the features they are able to provide us with that differentiate them from the competition (tight integration between their Phones, TV's, etc)
The same way that Sony has its devices set up to easily allow you to push your movies from your phone to your TV when you get back home, your music from your phone to your stereo, etc.

By nniillaa on 3 May 2012

Its still android....

Its android, that's why they are having such problems. Its not a very good system as compared to its rivals and fragmentation is big.They should start focusing on Windows Phone. Its easier to design for, provides enough flexibility and doesnt put the burden of the update on handset manufacturer. There's nothing wrong with being just a hardware manufacturer. It reduces costs and increases focus on products. Instead they should work with developers to have apps that integrate within their ecosystem. Although I personally feel that technology is getting to a point where people just want their gadgets to work with each other without any hassle.

By isaac12345 on 3 May 2012

Chicken and Egg

Samsung design and make their own processors, memory and screens - the vital components of a mobile phone. We could just as easily say is Android too dependant on Samsung.
@isaac12345 you forgot the /sarcasm tag suggesting they concentrate on Windows Phone.

By milliganp on 3 May 2012

Touchwiz masks transition

I always assumed that the Touchwiz overlay was the firm's long-term strategy for switching the OS underneath to Bada. I woud imagine the vast majority of people aren't interested in the OS itself and wouldn't even notice the difference.

If you ever get a chance to play with a Wave 2, you'll notice just how similar it is to using a Galaxy S 2.

By Lemax on 3 May 2012

@SwissMac

"In what way does 'Lock-in' deprive consumers of the choice of an [...] ecosystem?"
Ah, you're viewing the world through your iGlasses today (for a change, lol). In your terms; yes, we have a choice of insular ecosystems that are hellbent on destroying every other ecosystem. When I say choice I mean actual real on-a-whim interoperability with any other ecosystem. You know, kinda like your choice of Linux OS not caring which fork's software you put on it. Well... not YOUR choice obviously... you seem determined not to have one.
Oh, and that was some spectacular racism you treated us to. Please stick to fanboism. Ta!

By dubiou on 3 May 2012

@swissmac

So the iThing so called "walled garden" approach is OK for you, leaving no choice for you but to source virtually everything from iWhatsit.

Some freedom from lock-in there, pal!

By jontym123 on 4 May 2012

Well done the_bunker for setting a new record for multiple posts!

By Stiggy on 4 May 2012

Samsung also make some very nice Windows Phone 7 handsets. Take a look at the Samsung Focus S.

By Stiggy on 4 May 2012

Do we need another OS?

Just because it works now for Google, Apple & MS (kind of), doesn't mean Samsung should 'copy' this approach.
Yes I agree they need to ensure they can continue to distinguish themselves & add more value than just nice hardware.
I would like to think that consumers are driving the need for harmony of services across multiple devices & OS; and that the 'lock in' will be just a minor irritation that we put up with, so that the Top execs can still pat each other on the back & congratulate themselves on their 'strategy'...

By the_bunker on 4 May 2012

@Swissmac

... your comment is ignorant and racist.

By mcmpro1 on 8 May 2012

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