Samsung matters, HP doesn’t, Microsoft doubtful

Samsung dominated CES Las Vegas

Samsung dominated CES Las Vegas

Want to know where technology is heading over the next three or so years? Then keep a close eye on events at Apple, Google and Samsung. You should also have dials for Facebook and Amazon on your dashboard.

HP and Intel clearly no longer matter. Despite a ripper 2012 with a slew of improvements and great products, I’m going to put Microsoft to one side. One thing is clear, Microsoft strategy is mainly reactive.

Samsung ascendancy

If you had asked me 18 months ago which companies drive the tech sector, I wouldn’t have included Samsung on my list.

Today the South Korean hardware giant sits at the top of the tree along with Apple and Google. Those three companies are making the decisions shaping the tools and devices you’ll use over the next few years.

One notch down and slightly to the side sit Facebook and Amazon.

HP is nowhere. That company is now very much a technology-taker. Stuck in a world of low-margin commodity products, HP is going through yet another meaningless restructure.

Microsoft? Ah, Microsoft. I’ll save my thoughts on this company for another post.

Smartphones, tablets

Samsung, Apple and Google own the smartphone market. The three brands share at least 90% of sales. Things aren’t too different in tablets. While they are all important in the PC business, that sector faces declining sales and importance. This is strike one against Microsoft.

One interesting question that’ll be answered in 2013 is whether Samsung moves to become more Apple-like. That’s been on the cards for some time. The hardware giant is the only company that has consistently challenged iPhones and iPads in terms of technology.

While the two are miles apart in tablet sales, the sales gap in smartphones is close. According to ZDNet, Samsung sells more phones in Europe while Apple is number one in the US. And overall, Samsung sells more smartphones. According to researcher Strategy Analytics, Samsung will sell 290 million smartphones in 2013. The research forecasts iPhone sales will reach 180 million.

Wither now Android?

Until now Samsung’s phone and tablets have mainly been based on Android, although there is a Windows Phone 8 smartphone.

Samsung says it will sell handsets based on the Tizen operating system. This is a move to loosen its dependence on Android. Presumably it could extend this to tablets as well. Samsung could use Tizen to build a vertical technology stack like Apple which includes software, hardware and services like cloud computing and app stores.

That decision has implications for Google. Samsung accounts for as many as half of all Android devices. Samsung is one of a handful of households name making Android kit and quite possibly the only brand selling Android products at a profit.

Without Samsung Android is screwed.This gives Samsung interesting options. It could nail Google to the floor or it could develop what would in-effect be its own operating system and technology stack.

The CES evidence

Samsung underlined its new leadership role by dominating this month’s Consumer Electronics Show in Las Vegas. The company’s press conference drew the biggest audience of journalists and its keynote including a guest appearance from Bill Clinton was also a show highlight. Reports from CES say the company’s booth was the most crowded and most impressive.

23 thoughts on “Samsung matters, HP doesn’t, Microsoft doubtful

  1. You and me don’t see eye-to-eye on this.

    Samsung, imo, are not going to just switch to Tizen, as their efforts with Bada would weigh on their strategy. The reason WP7/8 hasn’t taken off isn’t because it sucks (as you know), it’s because the ecosystem is not there.

    Now, if Samsung did completely switch they would sell barely any high-end devices (imo those customers are people who will be more intently looking for another Android device, if not from Samsung then there are plenty of other options, especially coming up from what CES has shown us). They would probably still sell a lot of low-end stuff as that is where people care more about price rather than OS.

    The thing about the ecosystem (and I think they can do it) is that they need to up their own expertise in UX/UI first. Their efforts on Android have been crap to bareable and they would need to step it up to get any basic suite of system apps on Tizen to make the switch (or addition of development along with WP/Android/iOS). They are getting there; their stuff is getting better it just isn’t great yet. If they can develop their own stuff so that a phone – sans all other apps – is useable as a camera, blogging tool, social media tool, messenger, etc. then it can make a very compelling low-end/mid-range phone substitute.

    As far as I see it, if Samsung exited the Android market in any great way they wouldn’t be taking the customers with them, Android would.

    Microsoft to me are an iceberg (Apple, in a way probably is too, but for different reasons). They do so much research into future gadgets and software, and most of it doesn’t get to market (Goddamnit, Courier! RIP) or is long-term stuff (all their speech recognition/real-time translation efforts that are coming together nicely). Microsoft have a lot of eggs in their baskets and I doubt we know about most of them until they want us to (afaik the only reason we saw Courier was because of a pissed ex-employee). They also have enough clout and capital to see them through the rough times and push the Windows ecosystem until it works.

    Amazon is a bit of a wild card; like Microsoft they have resources, and they are like IBM in that they are a big below-the-consumer-surface player. Their cloud platform and other AWS are widely used and I would say they are the leader in that regard; well ahead of anything Google is doing publicly.

    Facebook, well, facebook is there because it is there. I don’t know anyone that actively loves facebook, just people that use it. They use it because they either think they have to or they are too lazy to change to an alternative to catching up with friends. I don’t see their downfall for a long time because they re being sneaky in their efforts to make sure it’s too hard to leave them like a rich partner who happens to own the house you live in and bought you all your nice stuff.

    Would be interested in hearing a rebuttal, always good to discuss with you and that’s why I read your articles.

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    • Like you, I’m not convinced Tizen would work for Samsung. There are reasons why Samsung wants an Android alternative.

      Only three companies matter: Samsung, Apple and Google.

      Apple has a vertical technology stack.

      Google owns Motorola. Google can easily go vertical building its own phones and tablets. The company doesn’t make much profit from Android. It could profit from vertically integrated software and hardware.

      While Samsung is Android’s champion, that won’t matter to Google if Google decides it could make more money from running its own vertical technology stack.

      Also if Samsung wants vertical integration, it could be blocked because one of its biggest rivals controls a key part of its technology stack.

      At this stage, Tizen is Samsung’s only uncontested route to a vertical technology stack.

      Samsung makes a Windows Phone 8 device – Microsoft could be another Google bypass route to a vertical stack. That’s less likely, Microsoft is on the vertical stack path with its own branded tablets.

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      • I think you’re forgetting that Tizen is an open source project, not only under the control of Samsung. They have a similar situation as Android, although I don’t know how welcome upstream changes to Android would be from external companies…

        “Tizen is a registered trademark of The Linux Foundation” on the bottom of their site:

        https://developer.tizen.org/

        Been following this and many other open source mobiles OSes for a number of years.

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      • PS: I think Samsung are just testing waters and dipping their toes in as many pools as they can so they can stay afloat whether WP, Android, Bada, Tizen, Ubuntu on Phone does…

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    • I don’t really think of Android as being controlled by Google, because technically it isn’t (and technically it is). I would more say it is sourced or originates from them. They are the head, but they don’t care if you use Android, AOSP, AOKP, CyanogenMod, MIUI, Kindle (is that what it’s called?) or your own version. The only thing they lord over you is the Play store and Google Apps which you won’t get on Tizen anyway (or at least get it the same way as you would get it on a custom build of Android via sideloading).

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  2. Interesting…
    Here’s another point of view. There seems to be a growing number of voices that feel Apple has reached the top of it’s game. Many of the must have features that were once thought to be the providence of only iPhones have been equalled or bettered in recent versions of Android. The Samsung S3 has taken much of the popularity spotlight away from the iPhone and many of those that use iPhones depend on Google services: Gmail, Google Sync, Maps, Search, YouTube….. the list goes on. Although not scientific, the presents of previously die hard Apple fans making the switch to an Android phone to me indicates that the Android platform has reached a level of maturity that satisfies the vast majority of users. It’s the high use of Google services on iOS that allows these users to make the switch to Android. Having made the switch they generally find the improved level of integration another reason to stay.

    I would argue that it is Google’s ecosystem that has helped Samsung gain its lead. Yes they make great handsets but if they were to move away from Android they wouldn’t have nearly the level of success they have had. As Nokia is finding, hardware alone does not a successful company make.

    Case in point:

    http://www.theage.com.au/digital-life/smartphone-apps/google-gains-by-creating-apps-for-the-enemy-20130115-2cqi6.html

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    • Greg, I think you’re largely right. But I’d say Google and Samsung are locked in a mutual embrace. Google needs an Android champion as much as the Android champion needs all the parts Google brings to the party. Take Samsung out of the picture and Android’s market share isn’t pretty.

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      • I think if it wasn’t Samsung there would be others, the major reason I think Samsung is at the top of the heap right now (we’ll ignore dirty reasons) is that they already were in the phone making business in a decent way and don’t mind not being fancy. That meant they could flood the market with a bunch of cheap phones so most people could find one they liked while most manufacturers were trying to make money on one or two phones.

        If Sony Ericsson didn’t contain the asshat proprietary-thinking part of Sony they could have done the same thing.

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      • I guess that explains Google’s push with the Nexus line of products and why they are sharing the love with a variety of manufactures e.g. LG and Asus.
        It’s interesting the amount of push-back Samsung and other manufactures initially got with their overlays. Since the release of Jelly Bean and the “closer to stock Android” feel the overlays have taken this has cooled down but it more or less created the market for the Nexus devices.

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  3. @beaverusiv
    I think Sony shot themselves in the foot long ago. Proprietary is there middle name. Open is the new blue. Something Google and to a limited extent Microsoft seem to get. I’m not sure that Ericsson was any less proprietary than Sony. Even if that aren’t they lack ability to be the major player they once were.

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    • I agree. I don’t have much knowledge of pre-SE Ericsson; I’m not old enough for that.

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  4. One other reason Samsung succeeds in the market is the company isn’t frightened of failure. It throws a whole slew of products at each market sector – some a bit wacky-looking. A few of them, including the wacky-looking ones, stick.

    That’s brave.

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    • It’s a strategy that makes sense definitely for them as they have the resources to do it and come out on top. Same as what Microsoft do, really, with new products. Remember Xbox? lol.

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    • Yup! It’s shot gun marketing. When speed to market matters as much as it does in the mobile phone space, and the cost of production is reasonably low, it would seem it’s better to put your resources into releasing products and learning as you go, rather than the long product and marketing research lead times some companies employ.

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