If we’ve learned anything from history, it is that no company, no matter how goliath, is safe in the tech industry. We’ve seen giants like Nokia, Motorola and BlackBerry bid farewell to their numero uno position in the phone industry, to be forgotten and replaced. So it doesn’t really come as a surprise that the market leader Samsung has started showing showing some signs of stress. But is Samsung too huge to fail? Perhaps, but that doesn’t mean it will still enjoy the same place in the future that it commands currently.
Samsung has been selling record number of smartphones year over year now, beating even Apple. After loosing its position as the top vendor in the last quarter of 2014, it managed to reclaim it in the first three months of this year again. However, even with billion dollar quarterly profits, the numbers have got the execs worried. Profits are declining, and so are the sales. Simply put it, Samsung is no longer selling the number of smartphones it did until a few years back. What’s more worrisome is the fact that even the latest knight in armor, the Galaxy S6, is said to be performing below expectations. Samsung is said to have cut the orders for components for its flagship, indicating that the demand might be weaker than initially anticipated.
So how did Samsung manage to make a mess of all of it? Well, it’s not completely Samsung’s fault, but the nature of the industry on the whole. Samsung’s phones have become so ubiquitous in the last few years that you can spot many of them in metros, trains, shopping malls and every public place across the globe. Until a few years back, Samsung had the best offerings across any budget for Android devices and they were generally well received in the market. However, to keep that position, Samsung released too many devices too soon. As a result, the innovation in those devices started taking the backseat. It was all fine when there were no serious competitors around, but that’s no longer the case. The likes of Lenovo, Xiaomi and Huawei have taken the market by storm. Their cheap offerings are loaded with the best hardware, which often becomes difficult for the bigger players outside China to match on their devices.
As a result, the focus has started shifting to these newer generation of companies which have started eating share from Samsung and others in the low-end and mid-end market, which happen to drive the highest sales volume. On top of that, Samsung has failed to bring any competitive devices in the market in the last few months. Most of its budget offerings are equipped with outdated tech. Others, which happen to be decently powered, find little consumer interest due to the same aesthetics as their ancestors. This makes Samsung’s phone hard to differentiate from each other and people tend to avoid such phones. iPhone 6 and iPhone 6 Plus have made matters worse on the top end.
Samsung was also among the early adopters of Android. Back then, Android was buggy and slow. Load a few apps and your phone would have huge load times for even simple tasks like opening the dialer. Unfortunately for Samsung, they got to share most of this blame, since their’s were the most common Android devices. While Google has improved upon the software, the perception around Samsung devices hasn’t changed much. People still expect these devices to slow down after a few months of use, which isn’t how it exactly works. TouchWiz doesn’t help matters much and has only added to that anti-incumbency wave.
So will the company eventually follow the same route as Nokia or Motorola? Perhaps not. Given the profits that Samsung has raked in the last few years, they have billions in cash reserves. Such money allows Samsung to invest heavily in R&D, marketing and what not. In other words, Samsung is too huge to fail. With its current cash reserves, it is capable of staying around for many years, if not decades. While in the future it might no longer enjoy the same position it had in the market, nothing is certain in the smartphone industry and one device these days is enough to change the fortunes around for these companies.