Samsung: Case Study: Emerging Issues For Samsung

Emerging Issues for Samsung

Follower to Leader

The big challenge for Samsung is to go from being a follower to being a leader in terms of gadget innovation. The Galaxy Gear and the Galaxy Round, which are Samsung’s latest two attempts on new form factors, have been met with negative reviews so far and have reportedly only deepened the company’s anxiety about what its “next big thing” will be.

This fear over its future is what’s driving Samsung to invest so much in developing Tizen, its homemade smartphone platform that it hopes will lessen its dependence on Google’s Android operating system. In this way, Samsung is looking to follow the business model that Apple has used and that Microsoft is now trying to emulat: It wants tight integration

Samsung Electronics, hit by waning demand in its key mobile division, needs to double up efforts in the world's fastest growing markets for smartphones, or it risks shrinking its business further.

Local smartphone makers in emerging markets like China and India are rapidly souping up the quality of their lower-cost models, and could become a real threat to the world's biggest smartphone vendor especially if it doesn't act fast.

Analysts forecast demand for premium smartphones will plateau in the coming months, given high penetration rates in developed nations. Penetration for smartphones in developed markets is estimated at between 75-85 percent, according to Citi, which forecasts saturation could be reached as early as 2014.

Indian and Chinese smartphone manufacturers are classically disruptive as they manage to produce products that are good enough at a fraction of the cost of comparable models from premium brands. Major local manufacturers now account for two-fifths of China's smartphone market, and one-fourth of India's. Xiaomi already sells four of the top 10 best-selling Android devices in China, and operates one of the top five app

They run their own successful app stores, mobile operating systems, and mobile services. They also hold the keys to which apps are preloaded on their phones. When BlackBerry wanted to take its BBM messaging service for Android into India, it signed a deal with Micromax.

The local manufacturers are not provincial outfits producing knock-offs, as some might be inclined to assume. But their main competitive tool, for now, remains price. Local manufacturers in China and India match the features of more expensive devices and manage to produce comparable hardware at a fraction of the price.

These manufacturers will continue to expand overseas, in search of new growth opportunities. Micromax is in Nepal, Bangladesh, and Sri Lanka. Xiaomi has its eyes on Malaysia and Brazil. Huawei is already in the US. Micromax recently announced that it would start selling its devices in the lucrative Russian market. ___________________________________________________________________________

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