Samsung Strategy and Smartphones: Smooooth
(this blog article was drafted a while ago, is part of the series on the mid-year strategy in smartphone bloodbath. I already gave you my view on Apple's iPhone strategy and Nokia's smartphone strategy. This is part 3)
The quick version - Samsung didn't pay much serious attention to smartphones until last year, but once it 'woke up' it has run on all cylinders. They tick all the boxes, and have a great strategy - which they are executing perfectly. Do I need to say more? Ok, this is a Tomi Ahonen blog so of course I have to waste your time with more words, eh? So lets enjoy the analysis.
WE LOVE EVERY PLATFORM
Samsung is everywhere. They offer Symbian smarpthones and Windows Mobile smartphones. They offer Android smarthones. As if that was not enough, they launched their own smartphone OS, called Bada. And to top it off, they are one of the 5 confirmed handset makers to do Microsoft Phone 7 smartphones. And bear in mind, they are smaller than HTC. Ranked number 5 they are barely bigger than Motorola selling only about 2.9 million smartphones per quarter. RIM does 11.2 million smartphones on only one OS..
But this allows Samsung two advantages. First, it means they know every platform that allows licensing to third parties (Apple, RIM and Palm/HP do not license to others). So they can optimize given smartphones for given OS capabilities. That means Samsung can release new phones whenever any one OS gets an upgrade, but is not hostage to any delays of one OS, because they can then release similar phones on a rival platform.
And perhaps more importantly, they can always answer 'yes' to any requests by any carriers/mobile operators. If the operator has a preference (and they could not insist on any OS that is not licensed to others haha, so this preference can only be between Symbian or WinMo or Android etc) then Samsung can say 'yes'.
So what makes Samsung so hot? Half of the big success is the Galaxy S series of smartphones running Android. Large screen multitouch iPhone look-alike smartphones, the Galaxy includes basic mimimalist iPhone clones, QWERTY sliders and even a model - called the Galaxy Beam - with a built-in Pico projector that will shoot a video on any white wall that is 50 inches wide. That brings any argument about whose screen is bigger - to an abrupt end. Did you say 50 inches. Yes, look at this...
Oh, and they launched the Galaxy Beam in Singapore already - price point? Same as the iPhone 4. Oooooohhh, I want one so badly..... (Sorry, having a bit of new gadget jitters)
How is that Galaxy strategy doing? Pretty stellar in fact. In 3 weeks Galaxy sold 500,000 units in South Korea. Apple's iPhone 3GS did 800,000 in six months. In the first month, the Galaxy did a million in the world across some 30 carriers/mobile operators. Yes, that is not 1.7 million like iPhone in 3 days - but compare this to a certain superphone launch by Google or a pair of Kin phone launches by Microsoft, and suddenly Galaxy is quite impressive and viable.
Then remember that the Galaxy will be available with more than 100 networks - the most of any Android handset and you start to understand its full potential. In the USA, Samsung is the best-selling dumbphone so Americans already love the brand, and the Galaxy is carried by Verizon, Sprint, T-Mobile and AT&T. Samsungs touch-screen dumbphones are already well established, selling more worldwide than Apple's iPhone. This is now the 'next upgrade' phone for those Samsung touch screen customers.
As Samsung's carrier relationships and global footprint is far wider than HTC and whats left of Motorola's shrinking market, and as Samsung is already the 3rd biggest smartphone maker in China - expect a stellar autumn for the Galaxy. Early reviews have been very positive, in particular about the Super Amoled screen that is considered the brightest and most impressive screen behind only the Retina Display of the iPhone. Except that the Galaxy screen size is 4 inches, and is remarkably clear in direct sunlight.
Samsung came late to the Android party (HTC and Motorola were well established by now) but Samsung arrived with a bang. It has an excellent base from which to build, not just the bestselling dumbphone in the USA, Samsung is now running neck-to-neck with Nokia for bestselling dumbphone of Europe. So the customers and the carriers know the brand well. And with this launch, expect a strong share of Android phones this Autumn to be in the Galaxy class.
CATCH THE BADA WAVE
The Galaxy is in the superphone class of about 600 dollar unsubsidised phone prices like the iPhone. That is a nice premium price bracket, but that is not where market shares are made. In dumbphones Samsung has 21% market share. Its the second biggest phone maker behind only Nokia, so Samsung has to cater to a wide range of price points, across its customers worldwide. So to be really viable and contend for the mass market, Samsung needs a low-priced smartphone strategy as well.
And here it did its surprise OS announcement last year, called Bada. The OS is now ready and the first Bada based phone was released, called the Samsung Wave. Have a guess how many it sold in its first month? A million, yes. Now this is quite different. Bada is a new operating system. New operating systems don't sell a million in a month. Android did not sell a million in its first month, not even in its first quarter. The only other new smartphone OS that managed to sell a million in its first month was the iPhone in 2007. Now Bada is the next best new OS launch since the iPhone. But most people didn't hear about it. Many don't even know that Bada exists.
Well, much of that reason is that the Wave is a low cost smartphone and is aimed at Emerging World markets. It sold about 280,000 of those Wave phones in China. But thats more Wave phones in one month, than iPhones sold in the whole of Q2 in China - the second largest country for smartphone sales in the world, behind only the USA.
What can I say? If you are a dumbphone maker, you have to migrate your customers to smartphones. Samsung has a cheap smartphone platform with Bada, which is far newer than Nokia's Symbian (aiming for the same low-cost market segment). The first month of Wave sales suggests Bada will be huge. Samsung now can capitalize on its enormous global reach to bring the Wave to those markets where prices are very tight, and the Galaxy to markets where there is ample space for luxury phones. And then they still do the occasional Windows Mobile, Symbian and soon Phone 7 smartphones as well, just to cover all the bases. And Bada's developer community is growing well, with its nascent app store also starting to be populated with early apps.
Samsung grew strongly smartphone sales since the start of 2010, far faster than the industry grew. Samsung made profits both quarters in its handset unit (even as its profits declined with the intensifying competition). Samsung launched a very potent superphone class smartphone in the Galaxy, to very good market reception; and launched a new OS and with it a low-cost smartphone - to the best new OS launch since the iPhone. This is a great smartphone strategy, executed perfectly. What more can I say. Go Samsung!