Will Samsung decline in the future?

_ Authors Ben Thompson, original title "Smartphone Truths and Samsung s Inevitable Decline". _

Many people were shocked after Samsung released poor quarterly results - I was surprised by the shock of everyone. In my opinion, the smartphone market is big, but it can be predicted by seizing the following key points Sex is still very strong:

1 / Everyone has a smart phone: I think this is understandable, and is the most important and most fundamental point.

2 / Most buyers will put the price in the first place: mobile phones from luxury goods into necessities, but also reduce the pressure on consumer prices. There are two reasons:

Even low-income buyers are not interested in consumer electronics and computers, but are still in demand for mobile phones and will certainly look at the lower priced models.

High-income buyers who have no love for consumer electronics and computers also have the demand for mobile phones. If necessary, low-cost mobile phone is also a good choice.

In other words, the average price of mobile phones will continue to decline, the high-end market will still exist, but only a relatively small share.

3 / Real numbers far outnumber percentages: Although the first reaction to market share is the percentage size; in fact, the real numbers are more persuasive. To give an example of Apple, iPhone's market share in 2013 was "mere" 15.5%, but global sales exceeded 150 million units. This huge number is enough to support iOS ecosystem.

4 / The high-end market is always there: It's like someone buying a cellphone to communicate and access information, while someone buying a cellphone is spending more on high-end products. Like cars, smartphones are also about appearance, performance, and user experience. Like mobile phones, mobile phones are both a symbol of identity and a necessity of life.

5 / From the absolute point of view, high-end smart machine is not so expensive: still analogy with the car. The cheapest Mercedes-Benz (US prices as an example) is 29,000 US dollars, equivalent to 46 times the iPhone 5S. The price of an iPhone 5S is three times that of the Moto G, while the absolute price difference is only $ 500. If you buy a car is the price of Mercedes-Benz 1/3, the absolute price difference will reach 20,000 US dollars.

6 / Low-end mobile phone quality greatly improved: Moto G is a very good model to meet the daily needs of many people. However, the more developed low-end market in Asia, thanks to MediaTek blessing, the region's cell phone prices lower, more stable performance. At the same time, the overall supply chain continues to improve, once again driving down the price of each part of the phone, even the cheapest products, the quality will not be bad.

7 / substantial App Store is the key to competition: the more perfect app store than the iOS App Store and Android Play Store, and Windows Phone and Amazon Fire app store will undoubtedly add to the market more lively. In this respect, the 28th principle also applies, that is 80% of users' needs are met with 20% of apps. In other words, what really causes the user's discrepancy exists in that tiny 20%. Of course, you would say that some users do not care about the differences at all, but most likely, this is a category of users who do little to reap revenues and ecosystems.

8 / Operators are important, at least for high-end users: Many users (especially in mature markets) have a high degree of loyalty to operators and only select models supported by the carrier's network. In contrast, those who frequently switch carriers (or dual-SIM dual-standby) are typically located in lower-income markets and high-end ones.

9 / screen size can not be underestimated: the screen size has basically become an important factor in the selection of mobile phones. Although the proportion of large-screen phones in the overall market is not high, the share in the high-end market is not low.

10 / Software is Important: Analysts have been using the same computer for years, regardless of the operating system. Now they also view the phone. In fact, just because of excellent software, Apple makes the hardware even more different. Many people buy iPhones or Macs, which are largely directed at the only operating system Apple has to offer.

Software-based differentiation extends from the operating system to the app. In the eyes of high-end users, the quality of the app is very important, and iOS in app quality far better than Android, for three reasons:

The commercialization of the App Store is still going to be better, especially in non-gaming categories; the fragmentation is low and the iOS app is easier to develop; most developers and designers who make good apps are more likely to be iOS;

Although Android catches up quickly in the game in-app purchase, more iOS screen sizes also increase the difficulty of application development, but the above three categories can not be ignored.

Let's look at the situation on the side of Samsung to see why Samsung's poor second-quarter earnings are expected. Samsung has created a healthy high-end business through these three areas:

Almost applicable to any one operator; 2. A pioneer in large-screen mobile phones; producing high-quality hardware, and low-end models opened a significant gap;

And these advantages have or are disappearing:

After two years of silence, Apple has dramatically expanded the iPhone's availability worldwide; as noted above, the hardware gap between high-end and low-end handsets is declining; more handset makers are starting to tap the big screen Market, Apple is no exception;

In China, the world's largest market, Samsung's troubles go a long way: Samsung's billions of dollars in brand image and distribution channels are easily met by Xiaomi. In addition to millet, Lenovo's future is also a bright future.

In short, Samsung's most fundamental problem is that blindly beat the hardware bit, while ignoring the difference of the basic software. Therefore, in the long run, it can only be reduced to winning by price. End game how, Samsung may wish to talk to Hewlett-Packard or Dell?