Saturday, November 1, 2014

Samsung shift its strategy in smartphone

Samsung seems to be suffering from weak profit.

According to the media, Samsung is going to focus on the lower end of the smartphone market, instead of pursuing flagship models.

Financial Times: Samsung to shift focus as handset profit collapses

Historically, Samsung was a follower of innovator of this industry such as Apple and Sony. It quickly introduced several new architecture developed by other companies into its products and sold them with low cost. This strategy was successful to maximize the market share, whereas leading to some legal battles.

My past entry: Legal battle of Apple and Samsung

Nowadays, Xiaomi, a Chinese electronics company, is rapidly growing in production volume of smartphone. It offers relatively high qualified gadgets with low cost, as well as that Samsung did in the past. Lenovo and Huawei are also strong competitors.

Samsung has some options as a mature company. First, it should develop its own brand. Apple has numerous enthusiastic consumers who are willing to buy all of its new products. If the cost-effectiveness has been the only advantage of Samsung, it will be overridden by competitors soon.

Second, shifting the target will be effective as Samsung is planning, at least for a while. There are lots of demand for smartphone in developing countries. However, it looks like a red ocean. The providers will be forced to do deadly battle of discounting.

Lastly, developing niche targets is also required. Recently, Samsung installed a new product named Galaxy Note Edge in Japan. It is for the first time to utilize a bent display of organic EL in a smartphone. I am not sure whether this product is successful, but the decision of Samsung to introduce it in Japan market first is correct. Japanese is keen to try new gadgets.

Now, Galaxy S III is the only gadget I possess as a product by Samsung. Whether I will buy the second depends on subsequent ingenuity of Samsung.

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