John Kirk for Tech.pinions:
> Samsung has reported a 60% fall in quarterly profits. Just three years ago, Samsung rose from seemingly nowhere to dominate the global smartphone market. Today, Samsung is being pressured from above and below as Apple steals away its premium customers and Xiomi and others steal away customers from the low-end.
Why did Samsung fail? In a word, commoditization.
> Pundits have predicted, correctly, that hardware would inevitably become commoditized. This, they proclaimed with confidence, would cause Apple’s prices to fall while Samsung, with its good-enough and better-than-good-enough hardware and its lower prices, would usurp Apple’s market share, relegating Apple to niche status. Ironically, commoditization DOES apply to Samsung — the favorite of the Priests of Market Share — but it DOES NOT apply to their favorite whipping boy, Apple. Why? Differentiation.
Read the whole thing. I love the way this pulls everything together.
samsung flooded the market with too many choices
alternatively Google and Carrier got scared of it.
Carriers in the US and China are moving away from Subsidizing because the high end customer who spend big are already using iphone.
Samsung only had big handed people.
growth slowed and too much stuffing of supply that all the bribing can’t clear the shelf.
Great article by John Kirk. Best quote:
“More than a 1-to-1 ratio of profit share to market share demonstrates a company’s ability to differentiate its products, provide more value than its competitors, command higher prices, charge a premium and enjoy pricing power.
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Less than a 1-to-1 ratio of profit share to market share demonstrates that a company is buying market share; that the company has not been able to differentiate its product in the market and is likely competing primarily on price.
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Pricing to gain market share simply for the sake of market share is a chump’s game.”
~ Bill Shamblin
Walmart and Amazon seem to be doing ok playing chump’s game.
Interesting observation, what does “doing ok” mean to you?
Amazon is not/barely profitable. they’ve been given a “pass” from wall street for this failing.
Walmart is very profitable — $16-17B each of the past two years. thus they have both profit share and market share, tho i don’t know what their percentage of profit is in retail. a bit of a different game, since their stores are in multiple sectors — home decor, groceries, landscape, etc..
smartphone market share and profit share is much easier to compare from one brand to another.
How long have people been crowing that U.S. carriers are “moving away from subsidizing” with only T-Mobile U.S. as evidence?
Somehow this is always connected to a prediction that iPhone sales in the U.S. will fall, once customers see what the true total cost of the phone is, up front.
Funny thing is, even on T-Mobile U.S. the iPhone is a huge hit.
The reality is that the major U.S. carriers don’t actually want to move away from phone subsidies because that’s the only way they can sell any high-end phones that aren’t iPhones, and they’d rather not be so dependent on Apple as the only maker of marquee phones to get people in the door.
Only too late did Samsung try to jump on the Tizen OS after realizing that the Android OS is a commodity trap.
Amazon is very profitable. They keep reinvesting profits and keep growing. I used to think that too.
Apple shouldn’t really be in the good position it enjoys. It doesn’t make many products. It’s products don’t have many ports, slots or myriad of features. Other products have higher res screens, bigger hard drives, some have styluses and kickstands.
Yet Apple thrives. But it’s not by doing many things but just a few things well. It’s a lesson that other companies should at least consider.
It’s also a lesson Apple needs to hold onto.