Samsung and phone companies [BBC]

by jeremy on May 19, 2012

This is a piece I’m recording for the BBC World Service. It’s based loosely on my piece about possible limits to Samsung’s impressive foray into smartphones. 

The interesting thing about covering technology for a living is that while pretty much every company within the sector is very, very different, all are, or want to be, the same.

Take a mobile phone manufacturer like Samsung. These guys are huge and have gotten huge very fast. In the first quarter of 2011 they shipped fewer smartphones than Apple, Nokia or Research in Motion, but in the most recent quarter shipped more than any of them. Needless to say they’ve very happy. But actually this success presents them with a huge problem. Because it turns out that making cellphones isn’t enough.

First is the problem of the software that run Samsung phones . After all a phone is just a chip or two, a screen, a battery, a microphone, a speaker, a case. Without software they just make useful paperweights.

Nearly all Samsung’s phones run on Google’s Android operating system. Which is free. Except of course it’s not. Because Google knows that the software is in some ways more important than the hardware. Ever tried to get an Android phone going without signing up for a Google account? Can you hear the clink clink of ad revenue dropping into Google’s pocket?

Samsung is an excellent maker of things, but not very good at making software. So it saves money, time and the groans of dissatisfied users by running Android on its phones. But the company  knows that this is not a good way to go in the long run, because you may end up like one of those PC makers back in the 1990s. What we call a commodity manufacturer, indistinguishable from other PC manufacturers, with price to reflect it.

So part of the problem for Samsung is not hardware but software. Then there’s another problem.

When we used computers in the old days they pretty much stood alone. Microsoft sold us Office, maybe a game or two and the thing sat alone in the corner of the room gathering dust. Nowadays every device is connected to the Internet, and we expect to be able to use that connection to interact with other people, download software, play games andbuy stuff and generally facilitate our lives.

What supports all this is an ecosystem. Payments, catalogues, developers, marketplaces, digital goods. Think Amazon. Think Apple’s iTunes and AppStore. Every Samsung phone connects to this world but most do it without Samsung seeing a cent.

Of course Samsung is trying to fix this. It has a store, it has content, it’s even hoping people will buy a smart TV that’s connected to the Internet and will let you move stuff between a Samsung TV and a Samsung smartphone.

The trouble now is, everyone wants this. A mobile phone maker wants to be a content seller, a search engine wants to have its own cellphone and operating system, an online store wants to sell its own tablet, a tablet maker wants to own its own network. No one player with big dreams can afford not to think in terms of owning the whole nine yards—the whole chain in which we the consumer live. To settle for anything less may end up meaning you settle for nothing, as just a commodity supplier of hardware, or content, or software to the others.

This is great for me as a reporter because every step takes us into uncharted territory. There are no maps for this anymore, and it will only get more interesting. 

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