Wall Street Journal:
Samsung Electronics Co. said it would reduce the number of smartphone models it offers next year, part of a move to cut costs to combat declining profit.
The South Korean technology major said it would cut the number of models by about 25% to 30%, Robert Yi, head of investor relations, said during a presentation in New York.
The decision to streamline its large smartphone portfolio came as the company seeks to cut costs to better compete with cheaper models, mainly from Chinese smartphone makers such as Xiaomi Inc.
Smart move. This approach clearly worked for Steve Jobs, in a move that is said to have saved Apple.
Fresh off a partnership deal with Microsoft that injected Apple with $150 million, one of Jobs’ first goals as CEO was to review the company’s sprawling product line. What he found out was that Apple had been producing multiple versions of the same product to satisfy requests from retailers. For instance, the company was selling a dozen varied versions of the Macintosh computer.
Unable to explain why so many products were necessary, Jobs asked his team of top managers, “Which ones do I tell my friends to buy?” When he didn’t get a simple answer, Jobs got to work reducing the number of Apple products by 70 percent.
“This approach clearly worked for Steve Jobs”
However, it did not work for one of his predecessors at Apple, Michael “What the heck is a Centris?” Spindler.
When Spindler became Apple’s CEO in 1993 he tried to trim the confusing number of Mac models that the company was making. He was entirely unsuccessful and not long after he became CEO Apple actually introduced a whole bunch of new models.
The problem was that there were too many chiefs at Apple, they all had their pet projects, and no one wanted theirs to be one of the ones to go.
So a big question is: What does the internal organization of Samsung look like? I suspect that, similar to Apple in 1993, they may get a lot of pushback internally on the executive decision to cut the number of phone models they sell by 25% to 30%.
Also note that it took even Steve Jobs about nine months after he became CEO (July 1997) before the number of Mac models and other products Apple was making were trimmed down (March 1998). I doubt that Samsung has someone of Steve Jobs’ caliber inside to drive these cuts. Most likely the reductions at Samsung will be much more modest than 25% to 30%, and there won’t really be any perceptible difference to consumers for most of next year.
the CEO is the boss — the buck stops with him. Spindler could have made it stick if he was an effective ceo. clearly, he wasn’t.
taking 9 mos to cut the models out of production is not that big of a deal. there are lead up times, inventory levels, etc. the industry wasn’t practicing JIT inventory like they do now.
For reference here is GSMArena’s current guess at Samsung products. Note, click on the “Available” filter at the top to streamline it to 7 pages:
http://www.gsmarena.com/samsung-phones-9.php
Good heavens, that’s an insane number of SKUs. I was just thinking that 25% to 30% won’t make much of a dent, considering how many phones they make.
Funny how the financial press still concentrates on that relatively insignificant $150 million while glossing over the far more important commitment to make Office for Mac.
OK, to be perfectly fair if you streamline it further to only smartphones that are currently available you get 381 models. Suppose you remove the tablets (7+ inches) and the odd smartwatch you’re still in 330 range.
Let’s say they are radical and cut the smartphone models by 30%, that would still leave around 225 SKUs.
Hilarious. As if that’ll make a measurable difference.
Samsung Electronics has 3 CEOs, but only two run the phone side. They all answer to the chairman of Samsung Group.
http://techcrunch.com/2013/03/14/samsung-now-has-3-ceos-with-the-addition-of-j-k-shin-and-boo-keun-yoon/
The $150 million is quantifiable, while committing to Office for Mac is not. (I completely agree that the latter was far more important, however)
It was quantifiable in that it was an understandable—if symbolic—number that added relatively little to the cash Apple still had on hand. The significance of Office for Mac required good market analysis, which was in short supply.
“… part of a move to cut costs to combat declining profit.”
Samsung Electronics had a $12 billion marketing budget at its peak in 2012. This was clearly unsustainable. Their second move should be to pull back on the marketing, after they kill off some of their smartphones.
“… the company seeks to cut costs to better compete with cheaper models, mainly from Chinese smartphone makers such as Xiaomi Inc.”
Ah, yes, the inevitable race-to-the-bottom. Xiaomi is already there, waiting for you, Samsung.
You can make decent money selling the 2nd best smartphone.
But selling the 2nd cheapest smartphone is a dead end.
The history of the tech industry is riddled with ineffective CEOs. Compare the number of times a CEO has been forced out vs retiring.
“Only two”
(“Hey, it worked for RIM, right? Right??”)
Even worse is how anti-Apple commenters are convinced that Microsoft’s $150 million saved Apple from bankruptcy.
Possibly because most of them have limited understanding of arithmetic. Especially the ones who still live with their parents.
I’m probably going to steal that last paragraph at some point.