How Samsung won and then lost the smartphone war

samsung mobile ceo jk shin introduces galaxy s5

Samsung Mobile CEO JK Shin

 

Business Insider:

In November 2011, Samsung released the first of a series of ads that would define the company for the next three years.

It started with a bunch of hipster-looking people waiting outside a mock Apple Store for the next iPhone. As the hipsters tick down the hours until they have the right to get Apple’s new iThing, they spot others on the street using something better.

The phone, Samsung’s former flagship Galaxy S II, had a big screen and a 4G wireless connection, two major features that were missing from Apple’s new iPhone 4S. And unlike the iPhone, you didn’t have to wait around to buy a Galaxy S II. You could get it now. But you didn’t see anyone lining up to buy a Samsung, or anything other than an iPhone, in those days.

Things started to change with the first “Next Big Thing” spot. Just like Apple poked fun at Microsoft with its “I’m a Mac” campaign in the 2000s, Samsung’s goal was to tap into the same strategy — a little guy taking swings at the dominant player in the industry — and for a while it worked.

By the end of 2012, Samsung’s profits were up a whopping 76%, fueled by the growth of the mobile division, which suddenly became the most profitable part of Samsung. Samsung was the only company other than Apple making a profit in mobile, and it seemed to be closing in on Apple’s dominance, prompting The Wall Street Journal to publish its famous “Has Apple Lost Its Cool To Samsung?” headline in January 2013.

samsung galaxy s ii commercial

Samsung’s Galaxy S II commercial made fun of Apple fans waiting for the new iPhone

By the time the Galaxy S4 launched in March 2013, the anticipation surrounding Samsung’s products could only be rivaled by Apple. It was officially a two-horse race.

But it only took another year for things to come crashing down. Profits tumbled in 2014, even during the normally lucrative holiday season. Throughout the year, Samsung blamed increased competition in mobile for the downturn.

Now, Samsung is gearing up for its most important smartphone launch ever on March 1. The question is whether or not the Galaxy S6 will be enough to help Samsung recover from its slump, or if it will share the same fate as former kings of mobile like Nokia, BlackBerry, and Motorola.

How did Samsung get so big so fast and how did it all go so wrong?

Competition from new players like Xiaomi and a renewed Apple were central to the decline, but corporate turmoil at Samsung, including a rift between the company’s South Korean headquarters and its suddenly successful US group, also played a major role.

Samsung Galaxy S5 iPhone 5S Fingerprint Side by side

The Samsung Galaxy S5 and the iPhone 5S

The birth of “Galaxy”

As the post-iPhone smartphone era began in 2008 and 2009, Samsung, along with many others, was hopelessly behind the curve. It relied mostly on carriers to sell its smartphones, but even then, there wasn’t any distinct branding to separate Samsung’s devices from the slew of other generic phones on the shelf. Depending on their carrier, consumers chose between iPhone, BlackBerry, or whatever their carrier threw in for free with a two-year contract.

By about 2009, Samsung decided it needed to come up with a new brand for its upcoming line of flagship phones designed to run Android, according to sources familiar with Samsung’s plans at the time. Samsung had a revolutionary new screen technology called Super AMOLED that it at first wanted to put in someone else’s device, perhaps a phone built by a major wireless carrier like Verizon. Samsung has always provided chips and displays for other manufacturers, and it wanted to license its Super AMOLED tech the same way.

Eventually, Samsung decided to make its own high-end smartphone to compete with the iPhone, but it had no way to market it. The “Samsung” name was synonymous with cheap flip phones and nice TVs. It was never mentioned in the same breath as Apple, BlackBerry, or Nokia. That could’ve set up the new device for failure before it even launched. Plus, Samsung tested its brand against Apple with consumers and learned it was barely recognizable as far as smartphones go. It needed a change.

So Samsung created a luxury sub-brand for its Android phones moving forward, the Lexus to its Toyota.

It chose Galaxy.

In March 2010, Samsung unveiled the Galaxy S, the first in what would become its successful line of Android phones and tablets. The Galaxy S had hardware specs that rivaled the iPhone but was also heavily criticized for copying the iPhone’s software and physical appearance. That didn’t seem to matter. There were hundreds of carriers in the world that still didn’t offer the iPhone, and AT&T still had an exclusive on the device in the US.

Samsung made deals with wireless carriers to promote the Galaxy S in stores when it launched that June. Even better, Samsung got AT&T to agree to sell the Galaxy S, even though it was sure to be a strong rival for the iPhone.

htc president jason mackenzie with htc ceo peter chou htc one launch event

It wasn’t that long ago HTC was king of Android

Two-horse race

Even with the successful launch of the Galaxy S, Samsung was still behind Android rivals like HTC. Both companies were making decent phones, but neither gave customers a good reason to choose one over the other. As Samsung prepared to launch its successor to the Galaxy S, the Galaxy S II, in the spring of 2011, it also formulated a new strategy to market the device, at least in the US.

According to sources familiar with the company’s thinking at the time, Samsung’s Korean executives wanted Galaxy to be the number-one smartphone brand within five years. (It ranked fifth in consumer surveys at the time.)

Under the US head of marketing Todd Pendleton and his team, Samsung was able to do it in 18 months.

At first, the Korean leadership at Samsung wanted to pick off the competition one at a time, starting with HTC, then Motorola, then BlackBerry, and finally, Apple. But the US team decided on a different approach. It was going to start a war with Apple, kicking off the smartphone world’s equivalent of Coke versus Pepsi.

It was a gamble. By attacking Apple directly, Samsung risked looking petty and desperate.

But “The Next Big Thing” campaign, developed by the ad agency 72 And Sunny, was a massive hit. For the first time since the launch of the iPhone, someone had created the believable perception that there was something better out there.

Tim CookApple CEO Tim Cook

Out-innovating Apple

With the launch of “The Next Big Thing” campaign came a lot of glowing press coverage for Samsung. There was a company out there willing to take swipes at the king of smartphones, and consumers were responding.

And for all the criticism Samsung got along the way for copying Apple, it did prove that the world was hungry for something the iPhone didn’t have yet — smartphones with giant screens.

In the fall of 2011, Samsung announced the Galaxy Note, the first so-called phablet with a 5.3-inch display. (The iPhone 4S only had a 3.5-inch screen.) Compared to most phones at the time, the Galaxy Note appeared absolutely massive. When it launched in February 2013, critics blasted the Note for being too large. The Wall Street Journal’s Walt Mossberg, one of the most famous tech reviewers in the world, compared using the Note to holding a piece of toast against your ear.

 

samsung galaxy note 3Samsung’s Galaxy Note created the phablet market

The initial reception was so bad at first, sources say some US carriers almost didn’t want to sell the Galaxy Note II the following year.

But the phone sold well outside the US, especially in Asia, and eventually Samsung was able to prove there was a market for phablets. Samsung’s phones kept getting bigger and better screens, while iPhone users were stuck with tiny devices.

A powerful narrative began to emerge in the press: Apple was in trouble if it didn’t catch up with Samsung and start offering phones with bigger screens. Many asked if Apple had lost its knack for innovation following the death of Steve Jobs, and Samsung was doing a good job at making that theory seem plausible. Apple’s stock dropped as low as about $380 from its all-time high of about $705, largely on fears that Apple didn’t have a revolutionary new product up its sleeves.

Meanwhile, Samsung continued to climb. Sources familiar with Samsung’s sales at the time said its marketing of the Galaxy S line of phones had residual effects and boosted sales of Samsung’s other products like washing machines and refrigerators. In fact, the US team was outperforming Samsung’s headquarters in South Korea, and other international offices were itching to adopt “The Next Big Thing” in their respective countries.

The campaign was clearly a success. Unfortunately, not everyone at Samsung saw it that way.

Missed opportunity

The success of Samsung’s Mobile in the US began a rift with the Korean headquarters. Sources say the more successful Samsung was in the US, the more complicated the relationship with headquarters got. Instead of getting credit, the US team felt they were being chastised for doing their jobs well. (Samsung declined to comment on this story.)

It got so bad, a source told us, that Samsung flew a plane full of executives to the mobile division’s office in Dallas for an unannounced audit that lasted three weeks in 2012. The Dallas-based employees had to go through all materials they used to sell and market Samsung’s mobile products. They were accused of falsifying sales, bribing the media, and a bunch of other damaging actions that hurt morale in the office. The same US-based office that helped turn Samsung into a brand as recognizable as Apple was suddenly being punished for its work.

After three weeks, the Korean auditors found nothing wrong with the way the US office had been operating and went home. But the damage had been done, and the perception remained at the Korean headquarters that despite its success, the US team was up to no good.

In fact, during one meeting with the global teams at Samsung’s headquarters in Korea, executives made the US team stand up in front of several hundred of their peers in an auditorium. The executives told the employees to clap for the US team as encouragement since they were the only group failing the company, even though it was clear to everyone the opposite was true.

That all but killed any hope of translating what the US team pulled off to other regions. They were able to continue in North America, but Samsung’s global messaging remained disjointed.

Amid these tensions, Samsung introduced the Galaxy S4 in 2013 at an over-the-top event at Radio City Music Hall in New York. Instead of the traditional product announcement, Samsung put on a Broadway-style musical that incorporated features of the new phone.

It was weird, one of those things you had to see to believe. And a lot of people criticized Samsung for putting on a show that seemed to objectify women. CNET’s Molly Wood called the event “tone-deaf and shockingly sexist.”

Samsung Unpacked Event 92Samsung’s Galaxy S4 event was criticized for objectifying women

Aside from the awkward unveiling, the Galaxy S4 also launched to mostly negative reviews. Samsung packed a ton of features into the phone like touch-free controls, eye tracking, and a whole suite of camera modes that were either unnecessary or didn’t work as advertised. Still, the phone was Samsung’s most successful ever, and 2013 was another very good year for the company.

But 2014 was going to be a wakeup call.

The rough year

At the Mobile World Congress in Barcelona last year, Samsung boasted it had sold more than 100 million units from its Galaxy S line over the last four years, a sales figure for a flagship series that only Apple could beat.

Then it unveiled the Galaxy S5, a phone that toned down a lot of the superfluous features of the Galaxy S4 while including some useful new stuff like an improved camera and water-resistant body. Like previous Galaxy S phones, the S5 had a plastic body and sold for about $650 unlocked. Based on the success of the Galaxy S4, the company had no reason to believe it had a dud on its hands.

It was wrong.

There were a lot of factors for Samsung’s major slip in 2014, but the biggest culprit appears to be Chinese smartphone manufacturers. Chinese companies like the startups OnePlus and Xiaomi appeared to have perfected the magic formula for making beautiful, high-quality smartphones that cost at least half as much as the iPhone or Samsung’s Galaxy S series.

Xiaomi was the biggest success story of the year. By some estimates, it was the top smartphone vendor in China, the next big market where millions of people are making the transition to smartphones. Xiaomi’s phones are made out of premium materials like metal, so they look better than Samsung’s phones. They also have similar specs like fast processors, sharp screens, and high-quality cameras.

xiaomi ceo lei junXiaomi CEO Lei Jun. Xiaomi was the top smartphone vendor in China in 2014

Xiaomi’s rise meant Samsung’s decline in China. Since Xiaomi phones are also Android phones, there was very little Samsung’s pricier models could do that Xiaomi’s phones couldn’t do. Plus, Xiaomi is a marketing success story. Fans snap up the devices with the same fervor Apple fans buy new iPhone models in Western countries. And most of Xiaomi’s marketing is done through social media or word of mouth, so it doesn’t have to rely on the multimillion dollar ad campaigns Samsung uses.

But Xiaomi is just one factor. A lot of Samsung’s success came because it was able to get a head start and distribute its phones on a broader scale before the rest of the non-iPhone competition could, according to tech analyst Ben Thompson, the author of the Stratechery blog.

For example, the iPhone was only available on about a third as many carriers as Samsung phones were. In the US, Samsung phones were one of your best options unless you were an AT&T customer and had access to the iPhone.

It was the same story on China Mobile, the largest wireless carrier in the world with over 700 million subscribers. Apple finally brought the iPhone to China Mobile early last year. Ever since, China has been one of Apple’s biggest growth areas for the iPhone business. Everyone else seemed to be choosing Xiaomi, Lenovo, or another cheaper rival to Samsung.

I think it’s always dangerous when you don’t know why you’ve won,” Thompson said in an interview. “One of the reasons Samsung succeeded is they pivoted in ways Nokia and others didn’t. They were able to leverage everything they already had, but weren’t able to sustain it because there wasn’t anything special about their phones. Samsung got crushed on the high end by Apple and the low end by Xiaomi in China.”

Thompson continued, “At the end of the day, there’s nothing to differentiate a Samsung phone, so they’ll have to compete on price.”

However, that doesn’t seem to be Samsung’s plan.

The new strategy

On March 1, Samsung will unveil two new versions of its next flagship phone, the Galaxy S6. According to sources familiar with Samsung’s plans, one version will have a metal body, a departure from the plasticky phones the company has made in the past. The second version will have a curved screen, similar to the Galaxy Note Edge that launched last fall.

But both models are still going to priced as premium products. According to one leak, the “Edge” version of the Galaxy S6 could cost over $1,000 without a contract, at least three times the cost of a Xiaomi phone.

Unless Samsung has a special trick up its sleeve on the software side, it’s unlikely that its new phones will be enough to justify the extra cost over similar Android devices. And if that happens, Samsung is almost certainly up for another messy year. The glow surrounding Samsung’s smartphone business has almost certainly faded for good. Time to find something new.

Samsung CEO BK Yoon

Samsung CEO BK Yoon at the opening CES keynote

That doesn’t mean the company is hosed. Samsung is a massive organization that makes everything from dishwashers to air purifiers. It has the scale and manufacturing power to harness the next big thing after smartphones, even if that next big thing doesn’t come from it’s own R&D labs.

Plus, its chip business is already very profitable, and is due to get a nice boost thanks to a reported agreement with Apple to make processors for the next iPhone due to launch later this year.

One key area Samsung is focusing on in the near term is the “internet of things” (IoT) trend, which means connecting everyday objects like light switches and toasters to the internet for a deeper level of control. At the Consumer Electronics Show in January of this year, Samsung announced that every product it makes will connect to the internet within a few years. In theory, this will build a valuable ecosystem connecting everything in your home and create a whole new category of Samsung customers.

Still, the company may always look back longingly on those brief years when it went head-to-head with Apple.

Link

What Samsung is saying about the Galaxy S5

Engadget:

Samsung isn’t going to make a big song-and-dance when it finally reveals its next flagship smartphone, at least not literally. When it announced last year’s Galaxy S 4, the company put on a pretty grand show in New York. However, that isn’t to say the current darling of Android is keeping everything a secret when it comes to the Galaxy S5. In fact, the company has shared a surprising amount about what to expect, without us even getting close to the rumor mill. And, because Samsung makes the majority of its smartphone components in-house (processor, screen and battery) many of these announcements are made from the sidelines, months in advance, then not-so-miraculously appear in the company’s mobile devices.

Last year’s Samsung flagship didn’t scream that it was truly a new phone in its own right … something that Samsung’s Mobile EVP, Lee Young Hee even admitted.

Broadly, Samsung’s said that it’s had a “back to basics” rethink on its next smartphone — a good idea given that the GS 4 really didn’t fall far from the Galaxy S tree. Slimmer, faster and sharper are all good, but last year’s flagship didn’t scream that it was truly a new phone in its own right. It’s even something that Samsung’s Mobile EVP Lee Young Hee, admitted in an interview with Bloomberg.

It’s partly true that consumers couldn’t really feel much difference between the two products from the physical perspective.” With this year’s model, she added, “mostly it’s about the display and the feel of the cover.”

So that’s the front and back, right? At its most asinine, it could simply mean the GS5 will pillage the faux leather effect that’s now the standard on both Samsung Android tablets and its Note 3 series. Samsung’s already transplanted the look to a limited-run Galaxy S 4, but it’s the mention of changes to the screen that’s got us a little more enthused than last year.

Samsung’s Galaxy Round was the first curved-screen phone, but it felt more like a proof-of-concept than a must-have smartphone. Software utilization of the odd curvature didn’t really sell the concept, and (especially compared to LG’s G Flex) distribution outside of Korea was (and still is) a rarity. Will the next smartphone follow up on the Galaxy Round’s shape or take the curved-screen notion somewhere that’s a little more, well, useful? When Samsung first introduced its smartphone-centered curved-screen technology, it was with a new concept family: Youm.

Will the next smartphone follow up on the Galaxy Round’s shape or take the curved-screen notion somewhere that’s a little more, well, useful?

This family of devices with wraparound (even folding screens) was very much a conceptual, fuzzy future-facing promotion, but the devices looked nothing like the Galaxy Round. The in-the-flesh demo model shown after the CES announcement offered a more realistic, handy way of utilizing curved-screen technology, scrolling notifications subtly along the edge of the device. Samsung is heavily invested in curved screens, and it could be the best weapon it has to differentiate from (most of) the Android pack — it just needs a better reason to exist in a smartphone.

Going on Samsung’s prior track record, screen changes are more likely to result in another increase in resolution. At Samsung’s own Analyst Day back in November (a rare event for the company), it detailed a wide-ranging roadmap of where its components business is heading, including what it’ll be bringing to its mobile devices in 2014. Let’s temper these points though: new features and upgrades mentioned could well appear in another device that’s not the GS5. (Gotta hold back something for the Note series too, right?)

Samsung’s President of Device Solutions Stephen Woo said that Samsung’s first (and less easy-to-understand) WQHD screen will appear in mobile devices this year. It’s not 4K — although that’s on the roadmap for 2015 — but it’s still a substantial resolution bump. At 2,560 x 1,440, that’s nearly twice as many pixels as a 1080p panel found on the Galaxy S 4. A resolution bump like this, however, could well be imperceptible to most eyes on a screen less than six inches across. As mentioned earlier, the company presented these slides without a definitive model in mind. It would, however, make sense when it comes to Samsung’s useful Multi Window feature, which allows the ability to “float” an app in a window above another app, or even split the screen between two apps (e.g., full 1080p video and space enough to write an email while you watch.)

The presentation didn’t stop there, however. It also touched on a new camera sensor, promising a 16-megapixel ISOCELL sensor inside a mobile device sometime this year. Samsung’s detailed its cheaper 8-megapixel cameras with the same technology, with the new technology promising to enhance light collection and reduce noise, improving color reproduction on the way. If the Galaxy S5 came with this incoming sensor, not only would it be an upgrade from the GS 4’s 13MP camera, it would even match the photography-centric Galaxy S4 Zoom, at least on pixel-count.

We’ve heard a lot about the hardware, and not so much about the software. As Samsung continues to rein in its ever-growing lineup of Galaxy tablets and phones into a more cohesive unit, the Galaxy S5 will likely fit right in the center of that. It gets vaguer as to what that user experience will encompass, however. Samsung’s latest Galaxy Tab Pro and Note Pro tablets showed off a new Flipboard-ish Magazine UX, which coexists alongside the more standard, icon-heavy Android home screen.

However, Google has been pushing against such divergent design and UI choices for a while. A substantial patent deal between the makers of Android and Samsung, as well as those reportedly “broad agreements” done alongside it, mean we’re not sure what we’re going to see on the Galaxy S5’s home screen.

The company said in a statement concerning its relationship with Android that it would continue to “provide differentiated and innovative service and content offerings.”

Here’s hoping incoming software additions are more like Multi Window and less like Smart Pause… and that Samsung’s got something on its new phone more surprising than some redesigned icons.

Check out this link:

What Samsung is saying about the Galaxy S5

Link

AT&T begins updating the Galaxy S4 Active with Android 4.3

Engadget: 

AT&T begins updating the Galaxy S4 Active with Android 4.3

Nope, it’s not KitKat, but hey, beggars owners of older Android handsets can’t be choosers. If you’ve been using AT&T‘s version of the Samsung‘s waterproof Galaxy S4 Active, you’re in luck: Android 4.3 is starting to roll out in the form of an over-the-air update. As you’re probably aware by now, the update keeps the phone in Jelly Bean territory, but brings a good deal of improvements, including OpenGL ES 3.0 support, Bluetooth Smart technology, enhanced notifications and 1080p Netflix streaming.

Good luck with that 772MB download, and do let us know how it goes.

Check out this link:

AT&T begins updating the Galaxy S4 Active with Android 4.3

Link

FREITAG Samsung Galaxy S4 Sleeve

FREITAG-Samsung-Galaxy-S4-Sleeve-03

In order to even out the playing field in the Apple vs. Samsung debate, Swiss accessories brand FREITAG has just released a custom sleeve case specifically built for the Samsung Galaxy S4. Made from their signature truck tarp material, the sleeve features a practical velvety inner lining that removes finger and ear prints, while a contrast pull release-tab on the back allows for lightning-fast call answering.

Available in FREITAG’s wide array of colors, you can pick up the sleeve for $70 USD online.

Check out this link:

FREITAG Samsung Galaxy S4 Sleeve

FREITAG-Samsung-Galaxy-S4-Sleeve-01 FREITAG-Samsung-Galaxy-S4-Sleeve-02