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« Preview of Full Year 2013 Smartphone Final Market Shares - We know a lot by now | Main | There Are Some Early AR Numbers - All Looking VERY Good for Augmented Reality »

January 04, 2014

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B aron 9 5

Two corrections:

1st at the end you got iPhone 5C and 5S confused. 5S is the premium model, not 5C. And BTW 5C is not the discount model, it is the one year old model. But you should at least correct the reversal.

2nd I'm not sure why this insistence that Motorola is dead from Mobile. Motorola Mobile unit was sold (for $12.5B, I may add) to Google, and continues to operate as an independent wholly owned Google company. Just like YouTube. Is YouTube dead? Then why is Motorola dead? Is Porsche dead, because now they were bought by VW? I know you are trying to make this fit into a "story", but it is beyond ridiculous.

I think your analysis is wrong on Samsung. Samsung, while a great and strong company, actually faces a serious threat starting in Q4/2014. They will be squeezed between the low cost Chinese Android OEMs (when they branch out of China in a big way) and Apple (particularly after they launch their bigger screen phones late Q3). That is not a good position to be in. Samsung has played all its cards already from giant screen phones, to enterprise (SAFE), to cheap smartphones, to $10B in marketing, to operator reach.

Apple, on the other hand, is still only in 1/2 the operators in the world, and the largest (CM) will only start distributing the iPhone later this month. They also have not played their larger screen card, etc. And the Chinese OEMs, particularly the $100 Android makers have not branched out of China and a few poor countries.

I, myself, am looking for Q4/2014 as the first chance we'll have to see the "natural" share of the market. We'll have Apple on CM and with larger screens and the Chinese branching out, not to mention Microsoft Lumia in full-on push. Lets watch Q4. My guess is that Samsung margins will suffer an incredible squeeze - in the 50% range. We are talking $10B in annualized rate of profits disappearing.

Oh, and Tizen and Jolly, the two challengers you chose to highlight will amount to nothing in 2014. Even Firefox OS will sell more than both of them combined.

B aron 9 5

As for the #3 Spot - it will not be any of the no-names that will rise. It will be Huawei who has the marketing $$$ and global reach to compete with Samsung. They will get there very quickly, this year, unless LG starts executing again. Huawei is giving guidance or 80M smartphones this year, which should give them 7% global share.

eduardo

Wow. "Microsoft has considered trying to get Android handset makers to allow Android and/or the Windows Phone OS on the same device"

www.zdnet.com/dear-windows-phone-team-two-oses-arent-better-than-one-7000024849/

Lee base

So much fun. Apple is larger than BB was and I never heard Tomi write so dismissively about BB. Two peaks occurred in 2013 and Tomi only called one of them (well, called it at least twice previously but eventually it came to pass). Peak iPhone was the correct call (but for the wrong reason)....and peak Samsung profits (went uncalled).

Only 1/3rd of Samsung's phones are in the "premium" (read as "competes with iPhone") category. Apple is selling 50% more iPhones than Samsung is of it's competitive products. And it's competitive products are suffering such declines that even Samsung's component businesses are suffering. On the low end where those market share percentages really live for Samsung, they are facing extreme pricing pressure from the Chinese. 2014 will see Sammy on top marketshare wise but falling further behind Apple in profits. Still, as most of Sammy's mobile profits are coming from the premium end -- and it's Apple ruling the roost there -- it is Apple hurting Sammy's profits the most. Utter foolishness to say Sammy isn't worrying about Apple.

Android phones have ALWAYS been cheaper than Apple. There is nothing new to happen in 2014 on this score. We all await Apple's results coming out of China Mobile...but left uncommented was Apple's utter dominance of the Japanese market that Tomi used to call "the most advanced market". The catalyst? Docomo finally caving and signing on with Apple. 2013's biggest news in mobile AUGHT to have been both Docomo and China Mobile signing on.

People are running out of excuses. It is clear that the ONLY thing Android has ever had going for it is price. People looking for the cheapest smartphone pick Android (or now a Nokia WP). But there is so little money to be made that if you add up all the money made on these 85% of phones....it doesn't add up to what Apple is making. No device created by Samsung nor Sony nor Nokia nor GoogleRola has changed this. Even with all the superior specs...and after all these years...they just can't make a phone to compete with the iPhone.

Not a single "this is why you should buy an Android phone" issue is going to change in the coming year. Android phones have had big screens for years now. Have always been cheaper. Sometime later this year they MAY catch up performance-wise (I doubt it). Won't matter. Those hero Android phones have never sold like the iPhone and they won't this year either. On the contrary, the under $200 Android phones (like the MotoG) are more than good enough for most people and they will eat the marketshare of the high end ANDROIDS.

Nokia Lumia 520 and the plethora of $100 Android phones are a non-factor as it relates to Apple. Feature phone users buying "smart phones" only to use them as "feature phones" mean nothing to anybody but Tomi's "marketshare is the only true measure".

As for blood bath - no mention of BB getting out of making their own hardware? The truth is that BB is now a moniker for Foxconn phones. BB the company is going to focus on enterprise software.

Has the power of Apple faded? We see Apple landing the two largest carriers in the world in the 2nd half of 2013. How is that supposed to equal faded power? We see the latest iPhone break all sales records AGAIN. Top selling phone in the world? iPhone 5s. Number two is the iPhone 5. Why? Because the 5s hasn't been rolled out everywhere yet and "the iPhone I can buy" even though it's a year old beats every other phone in the world including the latest Note from Samsung. Three is the Samsung GS4 and 4th is the iPhone 5c. The phone that allegedly flopped is the 4th best selling phone in the world.

Despite Apple's premium prices, only Samsung sells more smartphones than Apple. Despite not being offered by half the carriers in the world.

Those iThings sell iDamn well.

B aron 9 5

@Erendi Star "MS has always been used to living in a monopolistic space, where it was the only meaningful supplier.....So, it's not only that MS devices are crap, and force the user in a locked ecosystem, it's also the arrogance that will marr MS' ambition"

What are you talking about? You comments on Microsoft are completely wrong, and basically everything else on your post.

Yes, Microsoft has two dominant product - Windows and Office - out of dozens of products. On everyone else they are forced to compete fiercely, and with total attention to customer sat.

Microsoft has been fighting firing battles in the Game console space for over a decade - and it is the leading platform - both on technology - see Kinect - as in customer sat. It also has the #1 game playing platform in the known universe - XboxLive, with more users than all the other ones combined. These were all consumer successes that started from zero share and displaced formidable competitor like Nintendo.

It is also the #2 search engine - Bing. The #3 consume email - Hotmail/Outlook. It was the #1 TV platform Mediaroom until it sold it to Ericsson late last year. It is the #3 mobile OS Ecosystem.

In the enterprise id has been for 2 decades on a fierce battle with Oracle, IBM and other for the database market.

It is the #1 mouse and specialty keyboard vendors in Western markets.

You have no clue, as usual.

And Microsoft will bring quick innovation to Lumia phones - just think Kinect on Lumia - recognizing your face, where you are looking and air gestures not touching the screen for an idea.

B aron 9 5

@Lee et al....Continuing from the previous thread...Samsung today announced that their profit declined steeply in Q4 - even with the Galaxy S4 going full swing and the Note 3.

Sequentially from the sleepy Q3 to the hot Christmas Q4, Samsung estimated that profits dropped from $9.6B to $7.8B. Obviously not exactly a crisis, for a still very profitable company.

But the theme is the same. Samsung has already played all its cards in mobile. From giant screens, to super sized marketing, to distribution over 60% more operators than Apple, to the in-house components. It has no more easy arrows to play.

Apple still has CM and over half the worlds operators to go. It still has the large screen (5") and phablet (6", which I doubt it will play).

If Huawei had a tracking stock for its mobile phone division, I'd be buying that heavily (since I don't like shorts - limited upside, unlimited downside).

Samsung will be in a squeeze - and I really don't know what they can do. I can't think of any obvious way for Samsung to counteract Apple large screen phones and Huawei et all branding out of China in a big way.

How fast will it happen? I think it starts with a vengeance in Q4/2014. And if Samsung is crazy enough to launch Tizen in the west it will be worse. Further dilution of the brand, further confusing customers, and further increase in distribution and marketing costs.

Things are far, far, from settled for Samsung in the mid-term.

John D

oops !

Not so fast... what most people that understand the PC industry and saw Dell, HP etc destroy themselves with a non sense price war we see Samsung heading in that direction and TODAY it has been confirmed

Samsung Electronics forecasts fall in profit
It expects to make an operating profit of 8.3 trillion won ($7.8bn; £4.8bn) for the quarter, down 18% from the previous three months.

Yes ... right 18% down in a quarter and if the PC industry is a good yardstick that trend for Samsung will continue until profits are so thin that a new Nokia will be born.

Remember Samsung JUST manufacture phones and tablets ( talking mobile !), how long it can go on without major drivers like their own operating system, echo system, eliminating total dependency on google... there are hundreds of handset manofacturers but only 2 dominant enviroments and to Tomi's pain, soon maybe a third if Microsoft buys its way in.... Samsung is the next IBM PC, HP PC, Dell PC, Compaq PC ......

jj

@Kevin P
Yep, Motorola Moto G clearly shows Apple bosses to be as greedy as we’ve always suspected them to be..

RottenApple

@John D:

It's really nice that you throw around some numbers here without any source and any detailed information, meaning it's worthless as is your 'prognosis'.

So:

1. What business part reported an 18% decline of profit exactly? Mobile or computers in general?
2. Have you ever considered some seasonality in the numbers? Samsung hasn't has a major new release for several months. If this happens for Apple, it's written off as seasonal effects. If it happens for Samsung the doomsayers come out of their holes declaring the coming apocalypse.

This is yet another occurence of my main issue with the pro-Apple crowd: Exaggerating the good news for Apple and downplaying the bad ones, but doing the exact opposite for their competition.

Hypocrites!

Lee base

Samsung released the Note. Samsung has two major premium lines, one is released in the spring and one in the fall. Samsung also grew it's market share and unit sales. That's SUPPOSED to be a great thing. Yet WHICH of it's phones are selling clearly are the less profitable ones.

However, Samsung is still a 900lb gorilla. It's still massively profitable. It will remain massively profitable, but "peak profit" may have occurred last year. It is Samsung, not Apple, who's profits are most threatened by the low end Android.

Samsung is investing in the right areas with Tizen. Trying to transition into being a software developer, OS platform provider, ecosystem progenitor in it's own right. I do not think we'll see a competitive (to Google or Apple) offering this year...but we will see progress. They are making the right moves while still generating plenty of profit for them existing businesses.

What I do expect to see this year is an deal with Apple with respect to patents. Samsung has lost across the world, and they got nowhere trying to use their own patents against Apple as they are FRAND inhibited. Samsung is also feeling the sting in their component businesses from both their own slowing premium phone sales and Apple moving more of it's business to Samsung's competitors. Rumors of $30 a device for patent licenses are floating around. Whatever the number is, part of the deal is going to be a recommitment to Samsung's component business. Like Google, Samsung actually makes quite a bit of money from Apple's phones and wants to continue to do so.

So 2014 will be a less profitable, but still VERY profitable year for Samsung. I for one don't think Samsung is vulnerable to the Chinese the way American manufacturers were. I don't think Samsung is run as a fat and happy company ripe for being undercut. Sammy is a ferocious competitor. I think they will settle with Apple and turn their attention to battling the Chinese (in hardware) and Google (by continuing to innovate on top of Android, and with Tizen). The Chinese are going to have to learn to build a global brand and Sammy is the master there. Maybe Indonesia, Africa and Africa are areas where the Chinese will have some "success"...but it's simply not a business to cry tears over losing. I also expect to see consolidation among the Chinese as they compete to take all the profit out of hardware.

Lee base

How is the "nobody makes money in apps" business going? Well, if you are an Apple developer, you have had a chance at $15billion in payments Apple has made. Apple customers spent $10b on apps in 2013. That's $3b in revenue for Apple - almost enough to have bought Nokia.

For developers that's a $7b pie to go after, not including the money to be made in ad sales. Don't know if that $10b includes in app purchase revenue.

Dave Barnes

HTC is a Chinese company.
They come from the Republic of China.

Thomas

The remaining point of interest in this generation will be to see how control over Android plays out. Is Samsung satisfied with their position or should they act to consolidate it? For instance, by acquiring Nokia's maps unit to build a system parallel to Google, or perhaps accumulating a position of influence in Google to protect what Samsung has from outside control.

Secondly, as Tomi argues, it seems this generation of mobile phones is more or less done, apart from reaping the rewards, of course. The industry is settling, or has already settled, into the current ecosystems and business models. But is there a next generation brewing somewhere, getting ready to disrupt smart phones and their suppliers? If so, what does it look like?

E.Casais

"Maybe Indonesia, Africa and Africa are areas where the Chinese will have some "success"...but it's simply not a business to cry tears over losing."

It is interesting how on the one side LeeBase can say thoughtful things about the situation of Samsung, and on the other side be so myopic regarding the importance of China rising.

My contention: China is the player to observe because it will have the most impact in the medium term -- in _every_ area of the mobile space.

1) Smartphones: markets like Indonesia, Brazil or South Africa are _very_ important businesses. Just ask Blackberry. Besides, brands like Oppo are now cautiously trying to enter the high-end segment in developed markets with fancier devices. Huawei, Xiaomi or Oppo will strive to become new HTCs in the next couple of years. Chinese brands are now firmly entrenched in the unglamorous but important mobile data modem market -- try to find an operator whose USB modem offering is not predominantly or entirely from ZTE and Huawei.

2) Processors: Huawei, ZTE and the unavoidable MediaTek are designing their own CPUs -- octacore chips for smartphones. Budget, but performant, hardware platforms for budget, but not quite low-end, smartphones are emerging in China.

3) Networks: again, unglamorous but essential. Huawei is in ferocious competition with Ericsson for the first place in mobile equipment, ZTE with Nokia for the third place. Chinese vendors have been on the ascending path for a decade -- and with the NSA scandal, they are bound to make further inroads into the Internet data equipment to the detriment of Cisco and Juniper. After all, if you are to be spied upon, why not get the cheaper equipment from the player that does not yet have a military/spying/drone/bases international footprint and capability?

4) Satellites: Beidou. Comes from China, is already commercially operational in Asia, is an alternative to GPS and GLONASS. Again, an essential piece for location-based applications (incl. navigation), and a new alternative to the ubiquitous (and with the NSA scandal, tainted) GPS.

5) Software: I am convinced that blocking Google and others in China had even more to do with industrial policy than security or political issues. Chinese have learned to build, deploy, scale and manage equivalent services for hundreds of millions of users: YouKu instead of YouTube, Baidu instead of Google Search, Alibaba instead of EBay, RenRen instead of Facebook, Sina Weibo instead of Twitter, etc. Surely, you say, nobody would use Chinese services outside China? Wrong again. Two examples: The instant messaging system WeChat already has 100 million users outside China. The proxy browser UCBrowser is largely preferred over comparable Western products such as the better known Opera Mini in a number of countries throughout Asia and Africa. Such browsers are essential for mobile Internet access via feature phones (again unglamorous, but widespread in 3rd World countries) -- and also for astute smartphone users when browsing on GPRS or when roaming.

Chinese are playing Go. They are quietly enveloping the competition by occupying "undesirable" markets (feature phones, cheap smartphones, pre-paid, ARPU of 10$ per month), occupying unglamorous segments, starting with Asia, Africa, Latin America, then Russia/Bulgaria/Greece/Spain. By the time they attack the "desirable", "premium" markets in force, those companies unable to compete on low-cost will have nowhere to retreat.

I strongly hope Tomi -- who is based in Hong-Kong -- will target his projector more firmly at China.

Lee base

My statement with China was strictly as a competitive threat to Samsung. @ECasais went far beyond that to speak of other areas that I completely agree with. The whole "start from the bottom work your way up the value chain" is a tried and true path. Samsung has done it, Acer has done it, Lenovo has done it to name only a few.

The difference with Samsung is they haven't been outsourcing their own low end business to the Chinese the way the Americans like Dell outsourced to Acer to such an extent as "slapping Dell on the label" was about all that made an Acer computer a Dell (or perhaps it was Asus...but the specific name of the company doesn't matter).

For that matter, Apple helped Samsung attain scale and competencies which Samsung put to work competing directly against Apple.

The knock on joining the Android consortium from the beginning was the reality of the Chinese turning the hardware into a commodity leaving the likes of Sony, HTC, Motorola et. al. struggling to differentiate their offerings.

By the time one of the Chinese companies becomes king of the hill (if in fact they can and do overcome Samsung) - it won't be much of a hill worth having. It leads to the situation that we have in PC's today. There is next to no money to be made and it's starving companies from the funds to innovate. Who is today's "Compaq computer" doing their own original engineering and putting out cutting edge products people will pay a healthy margin for? In the PC world there is no such company left. There is little difference in an HP, a Dell, a Toshiba, Lenovo, Asus or Acer. In fact, little ol' "lost the war to Windows" Apple makes more money selling the vanquished Macs then ALL of those PC companies combined.

I'm just not sure if the Chinese have THAT much of a cost advantage over Samsung. And I credit Samsung as being more prepared than most to add it's own innovations in mobile. Lower profits for Samsung but still MORE profits for Samsung than anyone else not named Apple.

Winter

@LeeBase
The PC market is in such dire straits because of the MS monopoly. MS makes sure almost all of the profits end up in MS koffers. Differentiation is impossible because MS windows will sabotage any new features.

Android phones could escape that plight when producers can add features to the OS.

E.Casais

> My statement with China was strictly
> as a competitive threat to Samsung.

I understand why you were focusing only on Samsung vs China then.

> Apple makes more money selling the
> vanquished Macs then ALL of those PC
> companies combined.

Value chain. The profits in PC accrued to Microsoft, Intel, and to some extent to other component vendors (graphic cards and disk drives), not to DELL, HP or ASUS as such.

> it won't be much of a hill worth
> having. It leads to the situation that
> we have in PCs today.

There is always a taker for low margin businesses, and it usually has the last laugh.

Besides, if the goal is to spread the usage of technology and ensure it has a real impact on society, economy, education, etc, then what is needed are commodity products sold at razor thin margins thus ensuring high network effects. Impact of premium stuff is pretty limited if it targets only 7% of customers -- which is both the personal computer and the mobile worldwide market share of Apple.

> Apple helped Samsung attain scale
> and competencies

Apple went with Samsung because it already had the scale and competencies required for delivering the components it needed in quantity, quality and specs.

The major difference between Samsung and corporations comparable in size and business areas is that somehow Samsung has managed to make its different divisions work together. in short, synergy. Compare this to Sony and LG, which are also producing several of their own components, and have plenty of competencies in various consumer electronics: they have not been able to truly leverage and combine the individual strengths of their different divisions to produce superior mobile phones. Organizational competence counts a lot in those big entities.

Earendil Star

I absolutely agree that China is the market to watch. Well said.

Also interesting the move by MS.
There are (unfounded) rumours that MS is thinking about dual boot (with Android) phones.
No. Not at all.

What MS is aiming at, is for OEMs to produce devices that may run either Android or WP on the same HW. In practice, MS is in the process of jettisoning the strict HW requirements and total consistency (which also meant no differentiation at all) of its initial devices (which were all indistinguishable clones, much more so than any Android device).

Originally, MS was convinced it could easily gain traction in mobile, just by introducing a fancy (yet hideous) tile interface, and by taking over Nokia, while destroying it from the inside. In a totally "unfragmented" way. This strategy failed completely. And now MS has finally realized that this was wishful thinking. As it stands, WP has no hope of gaining traction, if not a bit by massive subsidizing by MS itself.

So now MS is trying to think how it could extend the base of compatible HW (instead of being alone producing WPs). The idea is precisely of making it possible to install WP on Android phones.

Is this realistic? Is it really feasible? Is this what MS is really aiming at?

I do not know. What I know though, is that this is further proof that the MS approach has been a failure and MS is well aware of this state of affairs and is desperately trying to find alternative ways of coming out from this cul de sac. While its Astros are raising a curtain of fog to hide this harsh reality.

Lee base

Here we are extolling the profit dominance of Samsung and Apple...and STILL we are Msft Astroturfers?

There is "down and out" and there is merely "down". Blackberry is down and out....as were Palm and a lot of other companies. Msft is merely "down". The iPhone/Android juggernaut completely wiped out Msft and it's WinMobile along with Symbian, BB, Palm and every other pre-iPhone platform.

Then Msft paid Nokia to commit to windows phone. And it was a disaster for BOTH companies. So Msft bought Nokia. Yes, Msft is down.

They are simply not out. They have too much money and too much commitment to be out. They can "bribe" carriers, they can "bribe" app developers, they can dump profitless cheap phones onto the market. They can use their IP patent portfolio to twist the arms of Android distributers like Samsung and HTC to put out WP phones. All to overcome the overwhelming odds of becoming a third ecosystem. Not to mention Msft's dominance in the enterprise, on the desktop, in gaming. Msft also has a complete entertainment ecosystem and search.

What can Jolla do? What can Ubuntu do? What can Firefox do? Nothing in comparison. None of those have a chance in h@ll to be more than a curiosity and wet dream for a handful of geek fans. Tomi is as deluded as the rest of you in thinking that someone can come into this ecosystem war without the resources of an Apple, Google, Samsung or Msft.

Apple leaves all kinds of money and opportunity on the table by catering to it's high end niche. But then there's Android which is FREE (but not free of Google's strings). There is no niche left untouched by Android. There is no oxygen left to allow the fires of these other platforms to get off the ground.

Msft has yet to reach it's Windows 95 moment with WP. It's --maybe-- up to the Windows 3.0 moment. Msft didn't get anywhere with Windows until Window 3.1. This isn't me saying Msft is about to dominate mobile. This is me educating folks on Msft's long history in sticking with something, spending the money and the YEARS necessary.

For all the bad news about Msft, it still generates billions of profits every quarter. It still has more than 50 billion in cash.

Msft will have a minimum of 6% of the market by the end of the year and could go as high as 10% (already is in many markets). WP performs much better than Android on low end hardware.

WP grew throughout the whole year last year. Fastest growing of all the platforms (yeah yeah, from a tiny base). The point being that WP has already hit bottom and is climbing. The entire sum of all the remaining platforms don't and won't add up to the marketshare of WP.

Msft won't make any money from mobile. The next several years will still be investment years...just as Google is still in investment mode with Android.

BB10 is a decent modern mobile OS with innovative features. The phones are very nice phones. There is an incredibly loyal BB fan base. Slow moving enterprises have remained with BB. And STILL the platform has failed to get off the ground and their old platform continues to plummet.

If BB can't get a new ecosystem off the ground with all of it's strengths....and HP had WebOS in the palm of it's hand (pun intended) and walked away due to the remaining investment necessary for uncertain rewards...and Msft has to continue spend billions to get it's platform BARELY off the ground...HOW IN THE H@LL does Jolla have a chance? Or Firefox? Or Ubuntu?

Stop being fanboys and THINK. The only company with resources to play in this game with it's own platform is Samsung. Unfortunately for the "we want something new" crowd - Samsung is making all of it's money off of Android. Tizen is a "learning tool" for Samsung. Samsung is still missing many of the pieces to the ecosystem puzzle and is in no position to cut the ties from Google. But Samsun knows they need to become a software company and Tizen is one of the vehicles they are using to gain the skills.

In the LONG term play, Samsung will build up all it needs as a platform on Tizen, and when it feels it's ready, Samsung will fork Android and forgo google. Not with Tizen. With Android.

Kevin P

Reading people's responses, I think I phrased my earlier comment about Samsung's Google-free Android in China badly. I was mainly trying to draw attention to the way the company already has its own versions of all the key Google apps - the phones come with Samsung's own maps, email client, cloud backup, IM and even app store. It can develop and test these apps with real-world feedback from tens of millions of users, then when the time comes just roll them out internationally. It's a much safer way of switching away from the Google ecosystem than relying on some internal labs project like the Apple Maps disaster.

Lee base

Meanwhile - Google isn't just sitting back and letting others walk away with Android. Take a read of the following article for more details: http://www.phonearena.com/news/The-Google-Android-fork-Google-Play-services-Android-4.4-and-the-Nexus-Experience_id48229

It's not just Google services like maps which need to be replaced. Via Google Play API's, Google is taking control of apps such that if you can't run Google Play services, a LOT of the best apps will no longer work or will work with reduced functionality.

This is why Android 2.2 (Jellybean) is still about half of all Android phones sold even though it's years old. You have to go that far back to have a mostly complete "non-Google" experience. You don't even get a browser with the new Android without Google or without writing one yourself.

So yes, companies like Samsung are working to be free of Google. But Google is also working hard to be indispensable.

Place your bets.

B aron 9 5

Tizen is much more of a *risk* to Samsung, than an opportunity.

If Samsung tries to launch Tizen phones in the West (advanced economies) it runs *huge* risks. They will likely confuse and frustrate the customers. They have to divert ad dollars to the TIzen phones. They may pist off Google. They will have increased SKU counts and costs. They'd have to spend even more money on ecosystem development.

@Lee - I'm shocked that you think Tizen is all good for Samsung, with no downsides. I think it has huge potential downsides. Just like Nokia continuing with Meego had huge downsides - that is why it was killed.

Samsung having Android and WP (with Google and Microsoft doing the heavy lifting) is one thing. Samsung trying to promote its own ecosystem in the West is quite another.

I suspect that Samsung knows that. And that is why they pulled the plug on Bada and haven't launched any actual Tizen device.

Again, watch Q4/2014. That will be the critical quarter. Can Samsung prosper with 5" iPhones and Cheap Huawei Android phones?

How?

Lee base

I think Samsung has the resources to do many things at once. It's an inefficient methodology in some ways, but it's -a- type of innovation. Samsung NEEDS to master software development. They took a turn with Bada and then dropped it. I'm not sure how much money they made, if any, but surely they learned things in the process.

I also don't think Samsung WILL try to release Tizen phones in the West or if they do, I doubt they will back them with huge advertising budgets. Not this year.

Samsung has to TRY to get out from under Google's thumb. Google bought Motorola and you can be sure that NONE of Google's hardware partners feel good about that. Just as you can be sure that Google isn't comfortable that Samsung has become such an outsized dominant force in Android. After all, if Google was afraid of Msft/Nokia kicking them off mobile, are they any less afraid of Samsung?

So Google and Samsung have a dance going on. Each is very dependent on the other, each is very wary of the other. Each is making moves to ensure the OTHER is dependent on them. Google continues to innovate in ways that ensure you can't have the premier Android experience without Google services. Samsung never even mentions Android in it's marketing. Samsung is holding "Samsung only" developer events...even though it's Android the developers are working on.

Samsung is doing far more than just having it's own "skin" on Android. Look at the Galaxy Note, with the S Pen and the "two apps running on the screen at the same time". Samsung is working very hard to make "Samsung Galaxy" the "must have" Android experience.

Why should Sammy spend all that money when it's customers are willing to pay MORE for the "Google Experience" - running pure Google Android on Samsung phones? They do so to control their own future.

Apple is just so much further along the "we own all the technology that's important to us" route. Nobody could piece all of Apple's stack together all by themselves. Not at first. So Google enlisted partners and manufacturers adopted Google Android. It was a marriage of convenience. And now that they are successful they are afraid of their own partners for the same reasons they were afraid of Msft/Nokia. They want to control all of the technology that they depend upon as well.

Tizen makes a lot of sense from the perspective. It's a great learning lab for Samsung. It's a "plan B" in case Google decides to favor Motorola. It's a "you better NOT" chip against Google favoring Motorola. It allows Samsung to do things that they can't if they were to fork Android. They can replace Google services in a SUBSET of their devices without violating Google's "no forking Android" agreements.

Ultimately I think that Google will continue to out innovate Samsung and everyone else who is trying to create a "Google free" Android. It's like Msft with Office. Sure, you can use OpenOffice as a "more than good enough" replacement for Word. But Excel -- that one is harder once you get beyond the basics. And before you know it you will NEED this or that feature for ONE of the suite of products....and you will then find it easier to just "go all Microsoft".

But Sammy has to TRY to be free of Google and they have the resources to spend.

B aron 9 5

@Lee - I agree with everything you wrote. But that is exactly the point. Samsung HAS successfully differentiated with Android. They need to continue to invest in THAT and the Galaxy brand, etc.

Tizen, if they try to launch it massively in the West, which, unlike Tomi, I don't think they will, would be a massive distraction for the company.

Just think about a developer attending a Samsung developer conference. Do I develop for Samsung's Android or Tizen? Meanwhile the developers attending Apple's, Google's and Microsoft's developer conferences would be supper focused.

If developers smell that Samsung is hedging, they will also hedge. They will not commit to using more of the Samsung specific Android APIs and Services (like S Pen), if they think Samsung will ditch that for Tizen.

As I said, Tizen is not a free lunch. It is not just upside for Samsung.

All the Nokia cheerleaders here (who were advocating Symbian + Meego + One (Android or WP) simultaneous development are clueless, about how much effort it entails and how much it dilutes the focus of a company.

Samsung is a great company. I think they are smart enough to know all of this. And I think they will be very meek and circumspect with Tizen. As a "Lab Experiment" it is OK to play with it. Launch a couple of phones, in a few markets, etc. Like Elop did with N9.

More than that, though, is a different ball game, with unique risks (and yes potential rewards as well).

Lets wait for Q4/2014. But my guess is that Tomi is very wrong, if he thinks Tizen and Jolla will amount to a lot and that Samsung will rain undisputed at the top for a long time.

The one saving grace is that Samsung is not arrogant like Nokia. They are healthily paranoid. And the buses at Samsung City only start taking the developers home at 8PM, not 4PM like in Espoo.

Earendil Star

Just to clean up some Boring Astro nonesense.

Meego was killed (as was Symbian, Nokia's cash cow) because it had no value to MS. Meego was not killed by OPK, AV or any other independent figure. Meego was killed by THTRH Elop the Flop, the Mr Nobody in mobile MS executive (yes, this is what he has been pre, during and post his Nokia CEO tenure) during its (more or less) undercover mission at what was formerly known as Nokia. Of all options, Nokia adopted the least likely to bring any success (to Nokia, MS is another story): usage of WP crapOS exclusively, which by the way at the time (WP7) was a half baked unfinished stopgap (P)OS. So they jettisoned an OS that was ready (absurd, given all the money already spent and the little that remained to be added) and with a migration path (QT) to embark in a costly and suicidal transition to a totally unproven technology, offered by an unreliable partner, with no migration synergies whatsoever. In other words, they abandoned a proven ecosystem they totally controlled, to adopt an unproven dream with no contingency plan, with a future as a low profit OEM with no control on the ecosystem, leaving all the upside to MS. This ended in the only possible way: Nokia's collapse and sale (for peanuts) to MS.

Would have Meego sold? Of course it would, if it had been backed by Nokia. Nokia was even managing to sell loads of Symbian phones (before they officially announced their plan to abandon the platform), why in hell would they have had difficulties in selling Meego phones? Heck, they are even managing to sell phones loaded with the WP (P)OS... remember, the Nokia brand is the only factor that allowed MS to reach a bottom in its (until its Nokia acquisition in 2010) sub 1% market share position after launching WP7. This is why MS is still branding its phones with the Nokia logo.

So, why Samsung is going for Tizen. As usual, Samsung is doing the logical thing. It's hedging its bets. They do not know what the future holds (contrary to the Astros, who believe they know everything). So they develop an OS that may become incredibly precious if things were to change for the worse in the Android camp. Furthermore, differently than Apple and formerly Nokia, they are currently not in control of the OS. And they realize that this ownership can be crucial to improve their bottom line. These are the clear, simple and sensible reasons why Samsung is going forward with Tizen.

On the other small OSs (but this may also be relevant for Tizen)... how can they succeed? We all agree, it's very difficult. They do not have the MS immense cash pile to burn. They are extremely risky endeavours. Most likely they will fail. Yet, they may find some allies: the carriers. Many are speaking of the carriers wishing to find an alternative to Apple and Google. Which makes sense. But whom should they partner with? MS? Are we joking? MS? The company that as soon as they can will stab you in the back as they did with all their partners from birth to date? The company trying to pursue the Apple way, yet with (P)OS WP products, none of the aesthetic abilities of Apple, and a much tighter monopolistic grip on the PC? The company trying to recreate the Apple closed ecosystem with the 30% revenue skimming on everything? Are carriers complete morons or what? Carriers will continue to support MS as long as MS pays and it's small. But clearly this cannot be their preferred path. So this is where the potential for the smaller players lie: in a successful alliance with carriers. Providing them with an OS that enables the creation of an independent ecosystem, where carriers have a greater say than with any of the two big guys (Google and Apple) and the hideous dwarf (in mobile) MS.

Ah, but this does not fit the MS propaganda. Sorry for mentioning it. I forgot. Hush. Let's not speak of anything that does not please the cash rich MS. I apologize. Let the new Astro deluge restart unabated.

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