Samsung’s Stock Shock Shows The Shifting Sands Of Smartphones

first_imgA giant consumer-electronics company, dependent on smartphones for its profits, sees its stock hammered even as it reports huge earnings.Last year, that company was Apple. Now, it’s Samsung, whose shares fell 3% Friday as investors worried about sales of its flagship Galaxy S4 phone.Of Samsung’s $8 billion profit, 70 percent comes from mobile devices, so the concern is understandable. But wait: $8 billion, up 47% year over year? What’s not to like?A lot, apparently.Shifting SandsThe problem for Apple and Samsung is not just fickle investors: Consumers are equally hard to please. And outside developed markets, they are very cost-sensitive. Sub-$100 smartphones from everyone from Nokia to ZTE are catching on.Smartphones and tablets are almost all screens and chips. The glass displays and the silicon processors all come from the same substrate: sand. Wrap metal or plastic casings around them, and you have a phone. As Google CEO Larry Page recently mused at his company’s I/O conference, the raw materials of smartphones don’t add up to a big bill.The value to consumers comes from software, which is why Apple rolled out a major update to iOS, its mobile-device operating system, and Samsung is trying to figure out how to differentiate its Android smartphones from other devices running the same Google-designed software.Excess SuccessWhat Samsung may be facing, too, is that it simply did too good a job getting the revolutionary technology of a modern smartphone into people’s hands. Its marketing blitz over the past year may have convinced people to buy Galaxy phones, but investors aren’t persuaded it can repeat the act. (And indeed, Samsung’s weird New York launch and subsequent campaigns seem to have done it no favors.)Is there a way out? Perhaps the answer is to stop selling sand. As hardware becomes cheaper and more commoditized, software becomes more and more important. And not operating-system software: The Android vs. iOS battle, while likely to serve as fodder for comment threads for years to come, isn’t what matters.It’s all about apps now. Apple, despite its opaque ways, has done a good job of cozying up to key developers. Samsung is making strides here, from its partnership with Dropbox to the new Accelerator offices it is opening up in New York and Palo Alto, Calif.It might help, though, if Samsung’s user interface weren’t so complicated that it needs an “easy mode.” Get the software wrong, and all you have is an expensive hunk of refined sand. Can you blame investors for worrying that that’s what they’ll get stuck holding?Image courtesy of Shutterstock. What it Takes to Build a Highly Secure FinTech … owen thomas Why IoT Apps are Eating Device Interfaces The Rise and Rise of Mobile Payment Technologycenter_img Related Posts Role of Mobile App Analytics In-App Engagement Tags:#Android#Apple#Google#iOS#Samsung#Samsung Galaxy#smartphone#smartphones last_img

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