Ben Thompson took to his Stratechery blog to examine how a press release earlier this week from Samsung illustrates the Korean manufacturer’s disappearing differentiation. Samsung touted a new partnership with a slew of mobile content and service providers to package the Galaxy S5 with “exclusive, prepaid and discounted subscriptions.” Thompson rightly questions whether Samsung is being paid by the content providers or is forking cash over to them, then notes that either scenario illustrates the danger it increasingly faces: It seems to be positioning itself as a manufacturer of high-profile, cutting-edge smartphones at a premium price.
But consumers who are interested in those kinds of devices probably already carry an iPhone, and those who aren’t have countless other Android options available to them at a wide variety of price points. Samsung is likely to find its audience of brand-conscious Android-lovers decrease as it struggles to differentiate its devices, and the once-high margins generated by the Galaxy will surely shrink as that happens.
Thompson is right on all counts, obviously. I think Samsung understands this, which is why it has spent much of the last 18 months trying to co-opt Android and build its own ecosystem within Google’s OS. But Google brought Samsung to heel this year by strong-arming the manufacturer into easing up on efforts to bring its own mobile software and services to market. So Samsung’s best hope of creating its own mobile ecosystem lies in Tizen, the open source mobile OS it showcased at MWC in Barcelona last month. We have yet to see the first Tizen smartphone come to market, but the OS has received generally positive reviews. If Tizen fails, Samsung will likely be relegated to being just another low-margin mobile device manufacturer.