Wednesday 29.3 Samsung launched its latest mobile phone, the Galaxy S8. The phone is by all means impressive in itself. It includes a myriad of new features and a new form factor that made people attending the event live (and me in Oslo) wanting one asap.
However, the launch wasn’t about the phone. It was about the transformation of Samsung into becoming the new ecosystem of the internet age, joining Amazon, Apple, Google and – stretching the concept- Facebook. If everything Samsung promises is true, now you can put your S8 in the center of a world that allows you to control all appliances at your home, make an appointment with your doctor, pay at merchants, watch and create videos and movies in VR… Samsung aims also to replace your desktop with your phone and a monitor and keyboard. It is called DeX. In addition, all these elements can be controlled by Bixby, the new AI powered digital assistant acquired by Samsung from the same entrepreneurs that created Siri.
The most interesting issue is, however, the way Samsung is creating this new ecosystem, because it is a blueprint of the original Apple recipe.
First of all, Samsung has taken all its products and bonded them together to work with each other. Apple did the same with the iPhone, the iPod, the Mac and finally the iPad and the Apple Watch. They work seamless in their closed ecosystem ensuring customer satisfaction and loyalty. However, in the case of Samsung the implications may become even bigger, because of the vast amount of appliances and electronic devices that Samsung produces. From washing machines to TVs to desktops and VR devices, Samsung has almost everything you need at home for domestic work, job and entertainment. The company is even putting together a list of partners, from virtual health care centers to IBM and movie studios in order to integrate great quality to proprietary apps in those devices.
Don’t be surprised if Samsung installs Bixby in its own line of living room assistants, similar to Amazon Echo or Google Home, partnering with Amazon for voice-activated online purchases.
Second, Samsung isn’t afraid of disrupting itself, as long as it can challenge its competitors and steal their profits. The DeX desktop will partially disrupt the Samsung line of desktops, but may steal market shares from Dell, Lenovo and HP, increasing revenues for the Korean giant. This is also a tribute to the genius of Steve Jobs. The iPad disrupted partially the Mac, but it also disrupted all other Windows PCs, stealing their much bigger market shares.
Indeed, Samsung is becoming the new Apple, furiously innovating and creating its own closed ecosystem of hardware and software on the shoulders of the open Android operative system. The consequences can be devastating for manufacturers of smartphones and household appliances alike. Few of them, if any, can match the product range and technological know-how and innovation power that Samsung has exhibited. Even Apple is rumored to include a curved glass too in the iPhone 8… that will be manufactured by Samsung. Huawei is probably very worried by now.
Success is still not granted, though. Smart appliances have been available for a while, but most users don’t see the utility of them. Desktop PCs are an industry in decline. Samsung will have to partner with many more movie studios and on-line heath care centers in order to give its ecosystem real value. Most of the job is still to be done. In addition, to create an ecosystem based on appliances is much more difficult than one based on apps solely. The development times are longer and the purchasing frequency lower. If Samsung wants to create this new ecosystem, the company will have to stick to this strategy for many years.
If it succeeds, it can build a competitive advantage for all its consumer divisions that may last for decades.
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