Ben Thompson on Why Samsung Will Fall

Thompson has a great post cataloging why Samsung is stuck in the pincers between sustainable high-end smartphones (Apple), and the inexorable appeal of lower-cost smartphones to those who are price conscious. Read the whole thing.

But I thought this one section – about the stupidity of analysts – is dead on:

Software Matters – For years analysts treated all computers the same, regardless of operating system, and too many do the same thing for phones. I personally find this absolutely baffling; you cannot do any serious sort of analysis about Apple specifically without appreciating how they use software to differentiate their hardware. The fact is that many people buy iPhones (and Macs) because of the operating system that they run; moreover, that operating system only runs on products made by Apple. Not grokking this fact is at the root of almost all of the Apple-is-doomed narrative (which, by the way, is hardly new).

Software-based differentiation extends to apps. While a fully-fleshed out app store is table-stakes, for the high end buyer app quality matters as well, and here iOS remains far ahead of Android. I suspect this is for three reasons:

  1. The app store still monetizes better, especially in non-game categories
  2. iOS is easier to develop for due to decreased fragmentation
  3. Most developers and designers with the aptitude to create great apps are more likely to use iOS personally

None of these factors are likely to go away, even as Android catches up with game-based in-app purchases and as iOS increases in screen size complexity.


Ultimately, though, Samsung’s fundamental problem is that they have no software-based differentiation, which means in the long run all they can do is compete on price. Perhaps they should ask HP or Dell how that goes.

In fact, it turns out that smartphones really are just like PCs: it’s the hardware maker with its own operating system that is dominating profits, while everyone else eats themselves alive to the benefit of their software master.

Maybe Tizen is the shovel that Samsung could use to dig themselves out of the hole?

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