A piece I wrote on potential roadbumps in Samsung’s ride to smartphone dominance.
Samsung Electronics is the world’s largest smartphone manufacturer and biggest user of Google’s Android operating system.
And, for some, that’s the problem.
Samsung’s meteoric rise – in the first quarter of 2011 it shipped fewer smartphones than Apple, Nokia or Research in Motion, but is now market leader – has handed it a dilemma. Does it risk becoming a commodity manufacturer of hardware, squeezed like the PC makers of old between narrowing margins and those who control the software that makes their devices run, or does it try to break into other parts of the business – the so-called mobile ecosystem?
“It comes down to this sense of what it is they want to be,” said Tony Cripps, principal analyst at Ovum. “Do they really want to be one of the power players or are they happy enabling someone else’s ecosystem?”
To be sure, Samsung isn’t in any kind of trouble, and isn’t likely to be so any time soon. Later on Thursday, it will launch the Galaxy S3, the latest addition to its flagship range of smartphones. Juniper Research expects Samsung to remain the No.1 smartphone manufacturer this quarter. The next iPhone upgrade is expected around the third quarter.
“Android has done wonders for them,” says India-based Gartner analyst Anshul Gupta.
But still the company has its critics. They worry that Samsung has yet to address the central contradiction of it making devices that use someone else’s operating system. By licensing the free Android OS from Google, Samsung saves itself millions of dollars in software development costs and license fees, but leaves itself dependent on Google.