Samsung's decline

[Mondozei]

If we look at Samsung, it has good offerings in the premium space, at least for Phablets where the Note series are the indisupted king of premium Phablets. The S-series are not doing as well, but at least they are doing decent enough.

The Alpha phones were a joke. Underspecced and overpriced. Samsung used to push a lot of budget phones but they are/were junk. Which is why companies like Xiaomi, Motorola, Micromax and many others saw an opening.

Buying a sub-200 dollar phone without at least 720p is just a non-starter. The true battlefield for this is in India, which is too poor to have a high-end market(unlike China) worthy of mention.

In India, Samsung's market share is dropping drastically, which independent market research firms like IDC and Canalys are all saying(Samsung, of course, disputes this).

I'm seeing parallells here between Nokia. The same kind of assumed arrogance. Samsung is changing, but just think of a phone like the Asus Zenfone 2. Android has gotten increasingly more efficient and you don't really need the 4 GB RAM version, 2 GB is more than enough. That phone costs 200 dollars MSRP. You get what is essentially a high-end phone.

Why would anyone spend 400 dollars extra on a S6? If Samsung loses their pole position in premium, they have nowhere else to turn. Tablet sales are dropping too.

Who would be their successor? A year ago I'd say Xiaomi but people are catching up to their very fast. Even in China, Meizu is starting to eat their lunch. In India, Micromax's Yu phones are going for their Redmi. The Zenfone was already mentioned. Motorola is doing the right things, finally, and will continue to improve.

Maybe we won't have a dominant player anymore, and would that be such a bad thing?

 

[Skurge]

http://www.sammobile.com/2015/02/06/review-samsung-z1-sm-z130h/

https://www.youtube.com/watch?v=IiEyX4nOMaY

90USD. Apart from the junk camera this could do really well. This is a dual core A7 and it runs really well. The money can be spent on a better display and camera instead of the chipset on a slightly higher end model.

 

[Megatomic]

http://www.sammobile.com/2015/02/06/review-samsung-z1-sm-z130h/

https://www.youtube.com/watch?v=IiEyX4nOMaY

90USD. Apart from the junk camera this could do really well. This is a dual core A7 and it runs really well. The money can be spent on a better display and camera instead of the chipset on a slightly higher end model.

Rebuttal. The Z1 is crap.

 

[dawheat]

Do we have to go through this every week? Would be nice to add your thoughts here and make sure it hasn't already been beaten to death.

http://forums.anandtech.com/showthread.php?t=2418578

IMO the threat to Android flagship are across the board as the midrange continues to improve. Samsung IMO has differentiators that other OEMs who want to sell flagship don't have. Who knows whether it'll turn the tide, but unlike everyone else, they don't have to compete with basically identical hardware (S810, 1080p or 1440p LCDs, etc), E.g.:

- high res, power efficient AMOLED screens
- Exynos 14nm SOCs that outperform the S810
- best Android camera in the Note 4 - even with the same sensor
- Gear VR support

If the S6 build quality is what they say and TW continues its improvement, I think it'll make one of the strongest cases for a flagship vs the M9, Z4, G4, etc.

 

[IamDavid]

Samsung and other handset manufactures brought this on themselves by not diversifying over the past years. What they now offer if 99% identical to the next guy. They should've been heavily investing in making Windows Phone a 3rd viable option along with supporting the development of a forth or maybe even a 5th option. I know it wouldn't have been easy but not doing so has jeopardized the long-term success of their companies.
HTC has finally understood this but I'm thinking its too late for them.

 

[IamDavid]

Carriers are in even a worse predicament by doing the same thing.

 

[Mopetar]

Samsung isn't going anywhere. Unlike almost every other Android manufacturer, Samsung has margins that they can sacrifice in order to maintain their position if they want to do that. Or perhaps they'll realize that selling more phones doesn't really amount to a lot when you don't make any money doing it.

I really don't think most of this recent trend is solely Samsung's fault either so much as the other manufacturers getting a clue and making good devices. HTC and Motorola (now Lenovo) had been in a serious funk for several years when Samsung was at the top and only recently have LG and Sony made worthwhile competitive devices.

It's not that Samsung fell down so much as everyone else caught up. When you're already on top it's hard to keep advancing even further beyond everyone else and widening the gap.

 

[Dari]

I understand what Samsung is doing but it just won't work. There are no apps for Tizen so, between this and a Microsoft phone, people will choose the cheaper Windows phone. They should've just put Android on it and called it a day.

Rebuttal. The Z1 is crap.

The Good

[This space intentionally left blank]

The Bad

Tizen has almost no apps right now, and no one is building apps for Tizen—not even Samsung. As the creator of the OS, it's Samsung's job to lead the ecosystem forward. Who will support this platform when even the platform owner won't?
The home screen only shows widgets—not app icons—which is pretty useless. You can only have eight icons on the entire home screen, all of which sit in the dock, which is universal across pages. More home screen pages just means more room for widgets.
Tizen uses a menu button, which often makes secondary functions hard to find.
Recent apps, a primary interface screen for heavy multitaskers, is slow, buggy, and uninformative. A lack of thumbnails makes it much less helpful than it should be, and some apps don't make recent apps entries at all.
Very slow syncing. Sure, Tizen will backup your pictures to Dropbox—once an hour.
Every single screen tap makes Samsung's "water drop" noise. You can't turn it off. Bloop.
We saw Tizen in 2014, and literally every feature we liked back then has been removed from the OS. What happened? Apparently developers spent the last year removing floating apps, expandable widgets, and recent apps thumbnails.

The Ugly

Tizen doesn't offer any innovative ideas. It's just Android with worse design, no direction, no hardware support, and no apps.

 

[Dari]

Do we have to go through this every week? Would be nice to add your thoughts here and make sure it hasn't already been beaten to death.

http://forums.anandtech.com/showthread.php?t=2418578

IMO the threat to Android flagship are across the board as the midrange continues to improve. Samsung IMO has differentiators that other OEMs who want to sell flagship don't have. Who knows whether it'll turn the tide, but unlike everyone else, they don't have to compete with basically identical hardware (S810, 1080p or 1440p LCDs, etc), E.g.:

- high res, power efficient AMOLED screens
- Exynos 14nm SOCs that outperform the S810
- best Android camera in the Note 4 - even with the same sensor
- Gear VR support

If the S6 build quality is what they say and TW continues its improvement, I think it'll make one of the strongest cases for a flagship vs the M9, Z4, G4, etc.

Doesn't seem to be working out for them so far. If anything, it makes their wares more expensive since they are the only ones making it and using it. The differentiators are an albatross.

 

[dawheat]

Doesn't seem to be working out for them so far. If anything, it makes their wares more expensive since they are the only ones making it and using it. The differentiators are an albatross.

Going to have to agree to disagree and see where Samsung is at the end of 2015.

Q4 revenues declined less y/o/y than Q3 and both margins and ASP moved upwards thanks to the Note 4 - a direct beneficiary of the above and the first of Samsung's major responses to the S5 semi-debacle.

Additionally, AP sales were a large boon to Samsung in Q4 - and all signs point to this increasing even further in 2015 as the Exynos 7420 hits the market. Even if the SOC cost is a bit higher than the S810, it hardly matters as it's a superior SOC and both revenue and profit simply go to another division of Samsung.

So I'll stick by my belief - Samsung is responding to the lackluster S5 with very good products and the S6 will be a continuation of it, with internal products like AP and memory providing multiple benefits.

Frankly I'm less sure where other OEMs go when they HAVE to pick the same products off the shelf as a dozen other OEMs with no other options.

 

[theeedude]

I am sick of Android manufacturers pretending their phone products are not commodities and charging in excess of $300 for them. I will get a Zenfone 2 when it comes out. If Samsung wants my business again, the magic number is $199. Maybe $299 with a nice camera and fingerprint sensor. But $500+ is not happening.

 

[Commodus]

The hardware features are nice, but Samsung overestimates their value. It treats smartphones the same way it does washing machines -- if we just stuff enough features into the checklist, people will have to buy ours over someone else's, right?

For a while, that worked. We have the biggest screens! The fastest quad-core processors! The sharpest cameras and the latest wireless standards! The problem is that this strategy only works so long as those features are meaningfully better. The Galaxy S III was a huge hit because it came at a time when big screens were still a big deal, and when Apple only had a 3.5-inch display (the 4-inch iPhone 5 wouldn't come until a few months later). Now, however, most smartphone makers have big-enough screens, including Apple; there are plenty of mid-range and high-end phones that are fast enough; and you don't need a 16-megapixel camera to post photos on Facebook.

In other words, Samsung can't just bump the specs and expect money to roll in. It has to show that the hardware will do something meaningful for people, and it's not clear that Quad HD AMOLED screens, 14nm chips and experimental VR headsets will do that. And historically, the software needed to exploit those hardware features has been the company's weakest point -- it tends to lean on a mix of gimmicks and half-hearted copies of whatever Apple is doing (S Voice/Siri, Wallet/Passbook, fingerprint reading) to win customers.

 

[Dari]

Going to have to agree to disagree and see where Samsung is at the end of 2015.

Q4 revenues declined less y/o/y than Q3 and both margins and ASP moved upwards thanks to the Note 4 - a direct beneficiary of the above and the first of Samsung's major responses to the S5 semi-debacle.

Additionally, AP sales were a large boon to Samsung in Q4 - and all signs point to this increasing even further in 2015 as the Exynos 7420 hits the market. Even if the SOC cost is a bit higher than the S810, it hardly matters as it's a superior SOC and both revenue and profit simply go to another division of Samsung.

So I'll stick by my belief - Samsung is responding to the lackluster S5 with very good products and the S6 will be a continuation of it, with internal products like AP and memory providing multiple benefits.

Frankly I'm less sure where other OEMs go when they HAVE to pick the same products off the shelf as a dozen other OEMs with no other options.

It's all cyclical so I'm sure the decline will continue unabated. China is a crucial market for them (and almost everyone else and sales are in free-fall there). In the end, my point still stand. Samsung's problem has nothing to do with differentiatiors (as features). Absolutely nothing. It has everything to do with price. Their products are expensive compared to their competitors. The vast majority of Samsung customers don't give two squirts of piss about AMOLED or Exynos or GearVR. Their massive economies of scale does not change the fact that the vast majority of smartphones have Qualcomm Inside. That's just the simple truth. That makes Exynos production more expensive. Should Samsung get into trouble with Qualcomm like they did with Apple, Qualcomm could walk, taking the shared cost of production away from Samsung, further driving up their average costs.

Let's admit it, having many ODMs is not a problem for any smartphone OEM. You know that and so do they, so pretending that Samsung making their own product is something special when it isn't. Even Apple goes to the same ODMs as Xiaomi or Meizu when it comes to displays and other products so your "worries" are non-existant. They have options when it comes to APs, displays, modems,etc...

In conclusion, Samsung also has options. But those in-house options are what differentiates it from everyone else because they have to invest in their productions whereas Apple and Android OEMs do not have to make such massive investments in their respective components, saving them money. I have no idea how Samsung can lower its prices without dismantling the infrastructure it currently has but this is a decision they're going to have to make sooner rather than later. Profits are falling fast and token salary cuts by senior execs won't cut it (pun intended).

 

[dawheat]

I am sick of Android manufacturers pretending their phone products are not commodities and charging in excess of $300 for them. I will get a Zenfone 2 when it comes out. If Samsung wants my business again, the magic number is $199. Maybe $299 with a nice camera and fingerprint sensor. But $500+ is not happening.

Eh - if you want a midrange phone, then there are plenty of good options between $200-$300, though I wonder how long those profit margins are sustainable.

You seem to put little value in bleeding edge hardware which is fine - but others may put a higher value on it. The Zenphone 2 has a 5.5" 1080p screen, a Intel subsidized SOC that performs somewhere between last year's S801 and S805, is 10.9mm thick, and 70% screen to body ratio. All decidedly mid-range.

Now whether any Android flagship with the newest stuff is really worth $400 more is a fair question, but the high end will always come at a premium. I totally agree that for most users, a mid-range Android phone today is more than enough.

I personally just always like having the newest phone every year - though I can see that changing in the not too distant future.

 

[Dari]

Also, Samsung going big on tablets has also backfired. As Apple's sales have shown, tablets are nowhere as sexy as phones when it comes to purchases. Nobody is buying new ones every year or every other year. Probably because they do far less with it than a phone, which is always with you.

 

[dawheat]

It's all cyclical so I'm sure the decline will continue unabated. China is a crucial market for them (and almost everyone else and sales are in free-fall there). In the end, my point still stand. Samsung's problem has nothing to do with differentiatiors. Absolutely nothing. It has everything to do with price. Their products are expensive compared to their competitors.

At the midrange I can agree with you, at the flagship level where all the profit is, I don't see that.

The S5, M8, and Z3 all launched at about $650 in the US. Right now on T-mobile, they're all going at low 600s. The only exception to flagship pricing has been LG the last couple years - which launches at equivalent prices but is very aggressive in cutting prices.

So I can buy an argument that all Android flagships are overpriced compared to midrange phones. However I don't see that Samsung's flagship phones are overpriced compared to other Tier 1 OEMs, much less Apple. In fact, I think compared to HTC, Sony, etc that Samsung cut prices on the S5 faster than them.

 

[Dari]

At the midrange I can agree with you, at the flagship level where all the profit is, I don't see that.

The S5, M8, and Z3 all launched at about $650 in the US. Right now on T-mobile, they're all going at low 600s. The only exception to flagship pricing has been LG the last couple years - which launches at equivalent prices but is very aggressive in cutting prices.

So I can buy an argument that all Android flagships are overpriced compared to midrange phones. However I don't see that Samsung's flagship phones are overpriced compared to other Tier 1 OEMs, much less Apple. In fact, I think compared to HTC, Sony, etc that Samsung cut prices on the S5 faster than them.

Does it really matter whether it's "midrange" or "flagship"? Does that help you spend $800 for a phone? Fact is even high-end phones are coming down in price, to the $500 range or even less. Midrange is going for $100-$300. Low-end are now less than $100. This is the schism that currently exists between those that get it and those that don't. Even Apple may have to adjust its prices eventually. The pain will not be Samsung's or Android OEMs' alone. Just as computer prices constantly came down over time, phone prices will have to as well. If Samsung's strategy and infrastructure is setup for $600-$800 phones, then it's doomed. If they adjust for $100-$500 then they will be fine.

 

[ponyo]

I think we're reaching saturation point in the high end. Apple got a big boost from finally going big screen with the 6 and plus but that card can only be used once. I recently sold my Apple shares as I think Apple is too dependent on iPhone sales now and I don't think iWatch will be massive success. Apple and Samsung will be fine and both will continue to print money but both might have peaked. Previous Apple slowdown foreshadowed Samsung slowdown. I think Samsung slowdown will foreshadow Apple slowdown.

 

[lopri]

I do not care about OEM's profits or "declining." But I do hope the market is competitive so that if one goes down someone else can rise to the occasion.

 

[theeedude]

Android smartphones need to be more like HDTVs in terms of pricing. That is, subsistence profit margins.

 

[zerocool84]

I do not care about OEM's profits or "declining." But I do hope the market is competitive so that if one goes down someone else can rise to the occasion.

And that's why Samsung is down because the Android space is more competitive than ever.

 

[grkM3]

I think we're reaching saturation point in the high end. Apple got a big boost from finally going big screen with the 6 and plus but that card can only be used once. I recently sold my Apple shares as I think Apple is too dependent on iPhone sales now and I don't think iWatch will be massive success. Apple and Samsung will be fine and both will continue to print money but both might have peaked. Previous Apple slowdown foreshadowed Samsung slowdown. I think Samsung slowdown will foreshadow Apple slowdown.

Exactly! Apple finally gave users a huge screen iPhone and is where samsung was 2 years ago with the gs3.you can quote this for this time next year when apple doesn't come close to this 1/4 in profits.

Ps samsung gained almost 30% profit from last 1/4 from when it was down 60% but no site is praising samsung for making 30% gains going up against the iPhone 6 and 6 plus.

 

[QueBert]

Exactly! Apple finally gave users a huge screen iPhone and is where samsung was 2 years ago with the gs3.you can quote this for this time next year when apple doesn't come close to this 1/4 in profits.

Ps samsung gained almost 30% profit from last 1/4 from when it was down 60% but no site is praising samsung for making 30% gains going up against the iPhone 6 and 6 plus.

Year after year the iPhone is the best selling phone of that year. Apple beats their $$$ predictions every year. I'll Paypal bet you any amount of $$$ that the biggest selling phone of this year will be from Apple. Every year it's the same, 4th quarter Apple releases an iPhone and in 4 months they do more than any other manufacture did for the rest of the year. The small screen iPhone 4 was smashing on Samsungs large screen phones. The new iPhones are partially selling well because of their size, but iPhones will always sell that's a given.

 

[StrangerGuy]

Year after year the iPhone is the best selling phone of that year. Apple beats their $$$ predictions every year. I'll Paypal bet you any amount of $$$ that the biggest selling phone of this year will be from Apple. Every year it's the same, 4th quarter Apple releases an iPhone and in 4 months they do more than any other manufacture did for the rest of the year. The small screen iPhone 4 was smashing on Samsungs large screen phones. The new iPhones are partially selling well because of their size, but iPhones will always sell that's a given.

Even in Samsung's golden period they were spending ~$13 billion on marketing alone to sell ~110M phones. You don't need to be an Einstein-level genius to see how easy it is for Xiaomi, Moto etc to wipe their floor in specs/price.

 

[grkM3]

Year after year the iPhone is the best selling phone of that year. Apple beats their $$$ predictions every year. I'll Paypal bet you any amount of $$$ that the biggest selling phone of this year will be from Apple. Every year it's the same, 4th quarter Apple releases an iPhone and in 4 months they do more than any other manufacture did for the rest of the year. The small screen iPhone 4 was smashing on Samsungs large screen phones. The new iPhones are partially selling well because of their size, but iPhones will always sell that's a given.

who said anything about most selling phone.I'm talking about its profit gains for the 1/4 and I'll bet you they won't hit anywhere near what they were with the 6s next year as they did now from giving people a bigger phone.

you really think a 6s is going to sell as much as the 6 did to hit there 13 billion mark again?

Ps I predict apple will lose 15-20% profit from year to year q4 / q1 withe the 6s as most people got what they wanted and apple's big screen market gets saturated just like Samsung hit a wall after the gs3.