Ben Bajarin on Samsung and The Innovator’s Dilemma →

November 02, 2015 |

Astute piece by Ben Bajarin on the likely future of Samsung, and Android as a whole:

One of the most interesting observations about all of this is the innovator’s Dilemma was supposed to impact Apple. This was a fundamental tenet of most bear cases. When the market for smartphones became filled with good enough devices at very low prices, why would anyone buy an iPhone? Yet this is impacting Samsung exactly according to the guidebook — but not Apple. The fundamental lesson to learn here is the innovator’s dilemma, in this case, only applies to Android land because all the hardware OEMs run the same operating system. As I’m fond of saying, when you ship the same operating system as your competition you are only as good as their lowest price. This is the curse of the modular business model. This is also why Samsung had hopes for Tizen. They actually knew this was coming. I know this because I discussed it with them in 2013 and was convinced they understood this was their fate if they continued to sell out to Android. Unfortunately, Android was their only option given its momentum. I’ll make a prediction. Samsung will be out of the smartphone business within five years.

It’s a bold prediction, no doubt, but bear with him.

Not many people would have predicted Nokia’s fate in 2007. The Finnish company was comfortably leading the mobile phone market back then and yet, by 2011 — a mere four years after the iPhone launched — they were so desperate already that they entered into a partnership with Microsoft, which would lead to the eventual acquisition of its mobile phone business and, ultimately, the demise of the Nokia brand in the sector.