How to make steady money making smartphones, when you are not Apple? It is a puzzler. It looked as if Samsung had it figured out. In its third quarter, however, mobile sales fell 15 per cent and profitability collapsed. It could be cyclical – or, like Motorola, Nokia and BlackBerry before it, Samsung may have lost its grip on a slippery market.
It should not be tricky: hardware, operating system, brand. Hardware is easiest, but not enough. The HTC One was loaded with cutting-edge design. It did not sell, and HTC fell off the manufacturers’ league table. The OS is harder. Before smartphones, Nokia ruled. But its Symbian OS was unsuited to rich media. BlackBerry melted down after losing its lead in secure email systems.
Microsoft’s mobile operating system, by contrast, is slick and well-regarded. It integrates with the most common PC software. It has all of 2.5 per cent of the market, according to IDC. The lesson is that for everyone but Apple, Android is the obvious choice, given all the apps and media available for it. According to Kantar Worldwide, a consultancy, Android dominates the nine countries they track, with market share from 58 per cent (Australia) to 80 (Spain). Even Samsung, market leader since 2011, chose to adopt Android. But proprietary operating systems offer the chance to lock in users. Samsung launched its first phone using homegrown Tizen in June this year.