The InfoStride Forum

TECHNOLOGY => Computing and Internet => Topic started by: ReadWrite on Jul 19, 2013, 03:31 PM

Title: Samsung Being Eaten To Death By Android Wannabes
Post by: ReadWrite on Jul 19, 2013, 03:31 PM
Even as Apple grapples with how to fend off Android-based Samsung for mobile market share, Samsung has its own competitive problems with Android. Actually, hundreds of them. Indeed, Samsung's biggest challenge may be to figure out how to fight no-name Android vendors in emerging markets.

Emerging Markets Take Center Stage Both Apple and Samsung have seen their respective stocks take nose dives in 2013 as the smartphone market slows. Verizon reportedly ( sits on $23.5 billion in iPhone commitments this year, with consumers slowing device upgrades. There simply aren't compelling innovations demanding that people rush out to get the latest, greatest smartphone.

At least, not here in North America, or in Western Europe.

In established markets like the U.S., smartphones already saturate as much as 61% of the market, according to Nielsen ( I tend to be someone who wants the newest device, but I've found myself regularly skipping versions of the iPhone because the improvements in the iPhone 4S, for example, hardly justified taking a carrier contract hit to upgrade from my iPhone 4. The same will be true if Apple releases a ho-hum improvement on my current model, the iPhone 5.

But this is not true of emerging markets, where feature phones still dominate. Here, as Flurry data indicates (, Android dominates due to its low cost and open architecture. Apple has been making up some lost ground with cash incentives and may well release a lower-end iPhone to help it compete, but the market is still Android's to lose. And given that Samsung sits atop the Android ecosystem, emerging markets should go to Samsung.

Samsung's Android Problem Or maybe not. After all, according to new survey data from VisionMobile's Developer Economics quarterly report (, while Samsung dominates Android, it's getting stout competition from the "Other" category:


In other words, Android's long-tail handset providers add up to a big problem for Samsung, as the report suggests:

These handset makers are made up of 100s of Android handset producers, leveraging off-the-shelf hardware platforms from Qualcomm and Mediatek and delivering customised Android handsets to Asia and Africa, with as small as a 10-people production team and own distribution networks. In this sense, Samsung’s biggest competitor in terms of market share isn’t Apple, but the 100s of handset makers who are able to supply the cheapest possible smartphones, customised for every corner of the developing world.
Fierce competition within the Android camp is driving down costs for consumers but is also eviscerating profits for vendors, with HTC profits taking a 90% nose dive last quarter due largely to stiffer price competition from Huawei and ZTE. Samsung has continued to deliver record profits, due largely to its focus on established markets, but the company is already starting to slow as mature markets yield less opportunity.

Looking To The Cloud For Profit As all vendors turn to emerging markets for growth, the fight will move to cloud services to generate profit, as I've argued before ( Samsung device margins will be nibbled to death by the army of Android wannabes, but Samsung has been aggressively investing in cloud services like Music Hub, synchronization services and more.

Unfortunately, the best cloud services still come from Google, which gives them away in order to drive mobile ad revenue. Google isn't giving that away to its Android licensees. As such, Samsung and its clones will still struggle to make up falling handset profits in cloud services profits. They simply may not have any other choice.

Suddenly Apple, with all its market share problems as the premium provider, looks to be in an enviable position. These same Android clones cut into its ability to compete in emerging markets, but its profit share will likely climb relative to Samsung in such markets.


Creative Commons image courtesy of Ron Bulmahn (