Would Samsung be more competitive if it was vertical?
Would Samsung be more competitive if it was vertical?

Samsung sells more Android devices than anyone else. The company’s smartphones compete head-to-head with Apple’s iPhone for market share. Samsung also is the leading non-Apple tablet maker.

Samsung is arguably the world’s largest gadget maker – unlike many others it makes a profit.

And yet Samsung has little control over its future direction in the gadget market. That’s because it has to take its lead from Google, which owns Android.

Samsung could take greater control of its destiny if it went vertical. That’s trade jargon for controlling every aspect of its technology including the software controlling its gadgets, services that make the gadgets more useful and the app stores customers use to add functionality to their devices.

This is exactly what Apple does and many believe Apple’s vertical model is behind the company’s success. It means Apple has complete control over the entire customer experience. It differentiates Apple’s products from rival kit and it offers a competitive advantage. Owning all the technology can also be lucrative.

The big question is not whether Samsung has the capability to go vertical – there’s a wealth of talent in the company and much of the technology it needs is already there – but whether it would be a smart strategic move.

What do you think?

14 thoughts on “Could Samsung go vertical?

  1. Seems to me that Apple can get away with a vertical model because of the strong brand loyalty it has — people accept the lock-in because they love the devices. Samsung’s devices are, objectively, at least as good, but don’t have the fanbase to support a full vertical model.

  2. Samsung already make substantial modifications to Android, especially in the UI.

    A lot of those are probably trivial to apply on top of future versions of Android from Google, but at some point it might well make sense to not take a Google version and just make their own modifications to the source code of the version they have already.

    Amazon have already done this.

    • Amazon’s version of android is quite old. The Kindle Fire is only sold in locations where Amazon has the ability to provide it’s services. Books, video and music etc. The Kindle Fire is a media consumption device and so doesn’t need the added features of more recent Android versions.

  3. I do not think vertical is why Apple are successful directly, I think that is because of their cult and marketing. I think being vertical did make them rich, though. (Making more money on hardware by tying software features to it, ala Siri).

    I am not of the opinion that Samsung should go vertical as I think being open source solves the main issue of non-vertical; trusting your partners. Open source means that any time they are greatly dissatisfied with the direction take by Google they can fork AOSP and go at it. I think for the mean time being a Google Android Partner is better for them as they get access too the Play Store and Google Apps OOB. I would say Samsung should be very invested in Android’s direction and not leave it completely up to Google, either talking closely with them or creating a partnership with other OEMs to discuss and in turn discuss with Google what should happen and what needs to happen to make sure Android stays competitive, stable, and flexible.

    • I should add I meant they contribute more than ideas, but hire people who write patches, especially if they find an issue with Android (not their drivers, but those too) they can fix it. Maybe even hire and liase with persons at XDA.

      • Another note: that can be crowd-sourcing at it’s best; hire people who mainline new/experimental features in AOKP/CyanogenMod or even a new fork and get XDA to help develop them, getting it ready for AOSP if the demand is there, then submit patches to Google. People working with Samsung like this would be compensated.

    • Ah, the old “cult and marketing”.

      You could *maybe* call Apple a cult back in the 90s when they had 5 million customers. Now that they have 500 million (half a billion!) active iTunes accounts it’s ridiculous to call them a cult. They’re mainstream.

      As for marketing, Apple spends less than 1% of sales on marketing, or about $1b last year. Samsung spends about four times more on marketing AND then spends the same again on commissions and spivs, which Apple doesn’t do.

      http://www.forbes.com/sites/ycharts/2012/08/02/who-spends-more-on-ads-apple-or-microsoft-another-lesson-in-quality-vs-quantity/

      http://www.asymco.com/2012/11/29/the-cost-of-selling-galaxies/

      • When I say ‘cult’ I don’t mean how many people follow, but how devoted/blind they are.

        When I say marketing I don’t mean spending, I mean their public image whether cultivated from blogs, other people or tradeshows/events.

      • Also, when I say ‘cult’, I am not referring to everyone – just to make it clear – I’m talking about the diehard fans.

  4. I agree with @beaverusiv here. I don’t think going vertical would be in Samsung’s best interest. Samsung has proved they are a solid hardware manufacturer but I don’t think they have the necessary vision to create great software and they could never match Google when is comes to services. It was first player advantage that put Apple in it’s current position IMHO. Besides Samsung already have there own vertical play, Bada, which is hardly a run away success.
    Google and Samsung share a symbiotic relationship. Google has the software and services, Samsung the hardware. It a relationship that has worked well for both companies and should continue to do so.

    • Agreed. As Apple have proven in order to beat Google at their own game you better believe throwing lots of money isn’t going to cut it. You need time and experts to cultivate products, and Google has had plenty of both.

  5. Hmmm. What other hardware manufacturer farmed its OS out to another company? Ah yes, IBM to Microsoft. Turned out well – for Microsoft. Samsung take note.

    • Quite different situations, but I do agree Samsung should be aware of all kinds of business partnerships and how they’ve gone down the gurgler.
      One big difference is the open source nature of Android meaning if they start feeling gyped they can fork off and leave Google.
      Sidenote: I do hope they try Ubuntu for Phones…

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