How Samsung’s Tactics Made It Into What It Is Today?

The last few years have been very good for South Korean mobile manufacturer Samsung. With rising revenues year-on-year and a steady influx on innovative new models, 2012 culminated in Samsung dethroning Nokia as the largest vendor of mobile handsets in the world. While this was a significantly great achievement in itself, the fact that Samsung had to contend with the likes of Apple and its line of iDevices and come out as the victor only goes to show its strength and marketability. Let’s understand how this rivalry started between two of tech’s biggest giants.

Different Philosophies Lead To Different Products

Image courtesy of Asif Iqbal Shaik

Image courtesy of Asif Iqbal Shaik

When Apple launched the iPhone in 2007, it changed the world of mobile communication forever, especially the use of touchscreen and the user interface. The touchscreen form-factor, along with the incredibly well-designed software in iOS meant that the device was set to be an instant success. And Succeed it did. Steve Jobs’ vision combined with Jonathan Ive’s simplistic yet sober and differentiative design created a mobile that broke all records and brought Apple innumerable accolades. The iDevice line has now extended onto tablets in the iPad, and its burgeoning influence on Apple’s design philosophy can be seen in the latest versions of Mac OS, Mountain Lion.

One of the main features that led to the success of the iPhone was the fact that it was very easy to use and get acclimated to. The iOS ecosystem was built with usability in mind. Apple’s focus was on building a device that was highly functional, yet easy to actually use in a day-to-day environment. As such, the features that came bundled with the iPhone were minimalistic and did not extend the device’s functionality much further. Also, the pricing of the iDevice line could only be termed as premium. However, with over 500 million total iDevices sold and new models being added every year, it only goes to show how valued these products are.

Samsung’s Entry into the World of Mobiles

Image courtesy of Asif Iqbal Shaik

Image courtesy of Asif Iqbal Shaik

Samsung Electronics is the largest IT organization in the world today. With a workforce of 221,000, it has one of the biggest manufacturing facilities in the world. While Samsung focused on manufacturing semi-conductors over the years, with the advent of smartphones, it decided to join the fray by launching the Galaxy S in 2010. The Galaxy S was seen as a challenger to counter the growing influence of the iPhone, and it came bundled with a host of features. With a 1 GHz processor, 8/16 GB of internal flash storage, 512 MB RAM and a 4 inch Super AMOLED screen, the Galaxy S was one of the most powerful devices in the market at the time.

Along with the hardware, Samsung built a customized version of Android, called TouchWiz 3.0, which came bundled with the mobile. TouchWiz added features like the ability to customize homescreens and the dock layout, as well as enable more widgets. Currently, the latest version of TouchWiz, called Nature UX, is designed to create an organic consumer interaction, and comes with S Voice, an intelligent voice recognition agent. With S Voice, users can control over 20 functions like setting alarms, getting directions and weather info. Also, S Beam is a new feature that uses NFC to enable file sharing wirelessly across devices.

The Manufacturing Advantage

Image courtesy of Asif Iqbal Shaik

Image courtesy of Asif Iqbal Shaik

Apple has had to acquire its hardware from various sources. While the A6 processor which is used in the latest iPhone 5 is designed in-house, but it is actually manufactured by Samsung. The touchscreen for the iPhone 5 comes from Sharp, and the internal battery is built by Sony. The Wi-Fi processor is obtained from Qualcomm, while the touchscreen controller comes from Texas Instruments and Broadcom. Finally, the assembly is done at Foxconn in China. Any delay at any single hardware vendor would mean an overall delay in assembling the device, as was evidenced with the launch of the iPhone 5. A shortage in touchscreen availability caused an initial delay, as manufacturers looked to meet the demand for the device.

Samsung, however, has a huge advantage when it comes to manufacturing. As the world’s second largest manufacturers of semi-conductors, it builds most of the hardware that is used in its mobiles in-house. The Galaxy SIII, for instance, features Samsung’s Exynos quad-core processor as well as the flash memory and the Super AMOLED screen that is used in the device are all designed, developed and manufactured by Samsung themselves. Only the Wi-Fi and other sensors are sourced from outside. As such, the manufacturing costs for the Galaxy S3 are significantly less than its competitors.

The Device & Marketing Strategy Makes a Difference

While Apple’s strategy of launching 1 device an year with only the best hardware and premium features works out well in the countries like US, UK, Canada and others who have a carrier subsidy system where consumers get the latest devices bundled with an annual or bi-yearly contract. But there are other countries in the world as well, especially developing economies such as China, Brazil, India and subcontinent where the number of consumers using a pre-paid mobile connection hugely outdoes the consumers using a post-paid mobile connection. In these countries, users have to pay for the device upfront so all may not be comfortable to buy a device that is priced much higher than their monthly income. They need cheaper devices but with competitive features which Samsung offers. It has a range of devices that are available for as cheap as INR 1,000 (US $20) to devices priced as high as INR 34,000 (US $625) while the cheapest iPhone is still priced at around INR 26,500 (US $490) in India. The Galaxy S3 price in India is INR 28,000 and buyers are finding a lot of value in it as opposed to Apple iPhone 5 which is price in India at INR 46,000. Samsung also offers handsets with a variety of hardware and software configurations which help users with specific needs. Samsung has devices with price point differences of just INR 500 (US $10) from each other not letting down the user with the abundance of choice.

Image courtesy of Asif Iqbal Shaik

Image courtesy of Asif Iqbal Shaik

This strategy obviously helped Samsung to dethrone Nokia as the world’s largest mobile phone brand in 2012 and defeat Apple in number of smartphones shipped every quarter which can be seen in the mobile phone market share report for 2012 by IDC.

Verdict

Samsung Galaxy series has sold more than 100 million devices across the world, with the Galaxy SIII at over 40 million sales. The SIII has also won over many critics with its design as well as the features it brings to the fore. While the demand for iDevices continues unabated, more and more users are getting warm to the idea of Android and the Galaxy line of devices, as can be evidenced from the sales figures. From being the underdog to the number one manufacturer in three years, Samsung has risen at a scale that other organizations can only dream of. With work already underway on the next iteration of the Galaxy line of devices, Samsung is continuing to innovate to stay as the number one mobile manufacturer.

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Written by Asif Iqbal Shaik

Asif Iqbal Shaik is a Consumer Electronics Expert with MySmartPrice, which is the best price comparison website in India. He is a computer sciences graduate and has been closely following consumer electronics space from last 6 years. He also is a technology blogger for the past 3 years.

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