So is the curious romance with anything Samsung about to come to an end? This is the nagging question in light of the most recent problems with Samsung’s mobile sales and profits. Indeed, Samsung is once again issuing a warning to the financial community. They plan to announce that profits in the most recent quarter dropped by as much as 26% over last year. The reason? Weak demand for smartphones, plus more intense competition in China and Europe. According to published reports, profits will be in the range of $6.9 billion to $7.3 billion, and it would represent the third quarter in which they have declined over the previous year
Shouldn’t this story be making headlines around the world, and not just in South Korea?
You see, while Apple has reported slimmer profit growth, and a decline in one recent quarter, the situation is nowhere near as serious as Samsung. Sales continue to grow for the iPhone, often ahead of analyst predictions, and Mac sales continue to advance ahead of the PC industry. But Apple was also considered to be on its last legs due to falsehoods about alleged poor iPhone 5 sales in 2012. None of it was true, yet the stock price collapsed over reports of alleged production cutbacks in the supply chain.
The situation didn’t change even when Tim Cook warned that you can’t take a few metrics from the supply chain and make assumptions. But that didn’t stop the onrush of stories that Apple can no longer innovate. Indeed, the Wall Street Journal is only the latest publication to make curious claims about Tim Cook’s leadership, that perhaps he’s doing too much by focusing not just on products, but the company’s stock, environmental and supply chain issues and things, in general, that Steve Jobs was apt to overlook.
Now it’s true most of Samsung’s sales shortfall is in the cheap and mid-tier smartphones that deliver minimal profits. But it’s not that the high-end gear, such as the Galaxy S5, is doing as well as some expected. What is apparently happening is that Samsung is getting battered by the low-end competition from Chinese handset makers, and at the high end by Apple. So they are spending a bundle to clear unsold inventory, which also kills profit margins.
Now if Apple suffered from the same dilemma, you wouldn’t hear the end of it. Samsung? Well, it gets some coverage, but Samsung doesn’t have the Apple aura, so you don’t see huge headlines about the company’s ongoing problems.
So there’s a published report today asserting that Samsung needs to be more innovative. Perhaps. But Samsung was built upon imitation. They even got away with it until Apple called in their legal team and fought back. Sure, you can still buy the alleged infringing products, and Samsung has yet to pay Apple anything despite owing them over a billion dollars as the result of recent legal defeats, but one hopes they got the memo this time.
The real problem is that Samsung is delivering mostly generic hardware that can be duplicated by loads of other companies at the high and low end. Where there are distinguishing features, such as a fingerprint sensor on the Galaxy S5, or the infamous Tilt Scroll introduced on the Galaxy S4, they are poorly implemented and often just don’t work. Sometimes the reviewers call them out on these failures, but it doesn’t stop them from still lavishing praise over the new handsets.
I suppose some might regard it as the chickens coming home to roost. So Samsung continues to build decent gear that doesn’t set the creative juices afire, nor upend a market. Up till now, with relatively high sales and profits, the industry has given them a pass. Some even regarded their copycat approach as somehow innovative.
But now that Samsung is facing the same problems already confronted by smaller handset companies, such as HTC and even Motorola Mobility, I wonder how the media will react. Or will they?
Of course, Google is still thought of as somehow successful with hardware, even though their biggest attempt, the result of squandering $12 billion to buy Motorola Mobility, was an abject failure, and they had to pawn the division off to Lenovo at a third the price.
Year after year, the latest Google “innovation” gets worldwide publicity. Most of it accounts for nothing. Google Glass remains an expensive “gearhead” gadget that is still essentially a public beta that you have to buy. The latest TV gadget du jour was announced at the recent I/O conference, but the predecessors have mostly fallen on deaf ears in the marketplace. Well, Google Chromecast seems to be doing well enough, but mostly for its cheap price. It’s still decidedly inferior to an Apple TV or a Roku box.
But without the marketing success of Samsung, which delivers most of the Android handsets and tablets, just where would Google’s mobile platform be anyway? As to Samsung, after the news of the sales shortfall disappears, the media will be touting a possible iPhone 6 killer this fall. It never changes.