Samsung Galaxy Family: Four New Members. Change of Strategy on Android Phone Market

The first question, I'm sure, many will ask: why did Samsung announce four smartphones a few weeks before the Mobile World Congress in Barcelona? The logic tells us they need to show the whole new lineup at MWC and put a PR spin on each of the phones. Nonetheless, for some reason the company decided to announce the models now. Why?

Another question comes to your mind when you familiarize yourself with the new phones. Out of four Galaxy models, you can make up two pairs, they are similar hardware wise, but are different in design. You learn about the price and whistle in amazement. Expensive! Each model is very expensive. Each phone has its competitive advantages, but to say they are a good value is impossible. The puzzle does not come together unless you know that in 2011 Samsung is changing its Android market strategy and this series of the phones is just the beginning. Let's see what is going on and answer the questions.

Samsung Android Smartphone Strategy in 2011

In 2010 Samsung put its money on Android, sacrificing even its own Bada in favor of Google OS. In the coming years Android will be a priority, this is where Samsung sees its future. In 2011 the company plans to sell 60 million smartphones, out of which 40 million are planned to run on Android. Very impressive numbers, especially considering the low start company came from. In 2009 it almost did not sell Android, a year later already sold about 20 million units, including about 10 million of Galaxy S (including various carrier versions). For the top of the line model this is an amazing result, this is one of the most successful products for the company, having the highest margin and generating significant profits for Samsung.

At the same time, in the mid-tier Android sales the company did not enjoy much of a success. In the middle of 2010 inexpensive Galaxy i550, Galaxy i580 are released. They have pretty modest specifications, look considerably more expensive against the competition. To say they enjoyed the success of the Galaxy S is impossible. The sales are mediocre, models became niche. On the other side, the company is happy with the margin, profit.

	Review of Samsung Galaxy 550 (i5500, Galaxy 5, Corby Smartphone) GSM/UMTS
	Review of Samsung Galaxy 580 (i5800, Galaxy3) GSM/UMTS Smartphone

So here we are faced with the first mystery. What is Samsung thinking when it relates its Android plans to a general phone market? The answer is obvious, this market segment has to generate maximum profits, we see it in every move the company makes. A player, who measures its actions against the competition in other market segments, trying not only to get the profit, but to gain a market share, is limiting its Android sales, sacrificing them for profit. Why?

The answer is called Nokia. This brand is missing on the Android device market. The market leader by unit sales already lost the leadership money wise. And the goal for Samsung is different here – to earn more in order to have the resources to invest into new generation technologies. Even more – Symbian, leading the smartphone sales, no longer is viewed like much of a smartphone OS. Main sales are with Nokia 5230, 5228 – they are chosen by customers as Nokia devices, having a brand recognition as well as touch screens. A weak attempt to compete with very successful and inexpensive phones from the Koreans. It was Samsung and LG who created the touch screen boom and managed to ride the wave, Nokia missed it. Today, Nokia is desperately damping, sacrificing its profit to stay in the game. At the same time, Samsung is establishing parity on the touch screen phone market, regular phone market, budget phone market. They win and significantly on value and because of that the market share is rapidly growing and top-managers speak openly about replacing Nokia as the largest phone manufacturer within three years. On the smartphone market there is no need to look out for Nokia who has nothing to offer, it can be ignored.

And here we come to another side of the equation. The low priced Android phones, what will they give Samsung? The answer is obvious – sales growth, which potentially can be measured in hundreds of percent. Let's look at the wider picture though. What will Samsung loose? Most likely the loss will occur in the touch screen phone segment, which will lose some of their competitive advantages. The unique position Samsung is in, is that while there is a demand for regular touch screen phones, the company cannot make their Android smartphones compete with them price-wise. The strategy thus appears to be very simple – inexpensive regular touch screens, then Bada, then the more expensive Android smartphones.

Therefore Samsung bets on the top of the line models, such as Galaxy S. In this market segment the company is capable of generating the highest profits, but more importantly there is no competition against its own products. The mid market tier is a different story. Here we have HTC, Motorola, LG, a number of second tier players and each one of them is trying to bite a piece of the Android market. Price wars erupt, when each of the vendors tries to raise its sales, sacrificing the profit margins. A great example of such strategy is LG – LG Optimus sold one million units in 40 days due to low price. We can say that LG purposefully gives up on the profit in order to gain a market share. Is this a winning strategy?

In a short term, the strategy is designed to win a market share, but will the company be able to hold on to it? It is a separate question. It may, unless there are strong offerings from other players. Here, we need to note that general Android sales grew 1000% in 2010. The growth will slow down in 2011, but it will still be amazing. Canalys predicts that Android will grow faster than iOS or Blackberry. Everybody is very optimistic about this market segment, which brings us to a very important idea: there will be a shortage of supply on Android market in 2011, thus price war strategy to gain the market share is senseless.

So there we found the explanation of some of "illogical" actions by Samsung. The company plans to raise the sales of Android solutions, but it is not after the market share. Rather it plans to receive a maximum profit from each of the phones sold.

What does it mean for a user? The obvious answer is that in the mid price market, where the price does matter, Samsung products will not look that attractive and will lose to the competition. However there is another, not as obvious consequence – the life expectancy of these models becomes minimum.

It is foolish to sell a model that is not a great value for over 6 months, its popularity will fade fast. Allow me to remind you, that every new phone has maximum sales in the first few months, later the market already knows it and it either sells on an even level or collects dust on the shelfs. To avoid it with Android phones Samsung plans to increase the speed of their update. Once in every six months similar models will appear with this or that function improved or added, but at a similar cost. The older models will be leaving the market. Very few companies are able to have such a tempo of model replacement, Samsung is one of them.

And here we come to another important conclusion – Samsung thinks that Android phone market in 2011 will become a mass market. In other words, the customers will not only look at the specs of the devices, but also at a brand. In the absence of Nokia Samsung has a huge opportunity and it will allow it to sell the phones at a higher price point.

Another aspect of the market situation: if you are under the impression that Samsung will always be looking for a maximum profit in the mid-tire market, it is not correct. The company expects to be mobile, to raise the value of its offerings with every new model (once in six months). This will allow keeping the positive dynamics, Android devices sales.

From the strategic point of view, Samsung has the most leveled approach to the market out of all Android vendors, it uses its weak and strong sides to the fullest. From the educated consumer point of view, Samsung models are positioned above the market, they are not the most affordable ones, do not represent the best value.

Galaxy Family – Four Newborns

If you recall, Galaxy i550/i580 was released without much of marketing, the phones did not attract much of attention. This time Samsung decided to create more noise for these four models, to put a spotlight on them and raise the sales. Relying upon the successful Galaxy S experience, you can be certain the attention of the public will be drawn to them and there will be moderate sales. These are niche models, for example in Russia each one of them will only be available exclusively through different retail chains. The limitation of the distribution channels always says that the prices will be high and fixed. At the same time the retailer (or a carrier in case of Europe and/or North America) has to sell a particular volume. We see that the Samsung strategy in this case is working.

Technically, we can separate the new models by hardware. In Galaxy Ace, Galaxy Gio HGVA screens are used (320 x 480), 800 MHz processor. In Galaxy Fit, Galaxy mini the processor is 600 MHz, QVGA (240 x 320) screens, but they have more than 3" diagonal, something we did not see on the market before.

Surprisingly, the QVGA is not a native Android resolution, we practically did not see it until recently (for example, the first Samsung model with such resolution was Galaxy i550). Overall, you can find about a dozen models with such resolution on the market, but their number is growing – some of the most affordable ZTE phones are coming out with it. In fact, these models cover the lowest price segment of Android.

The Galaxy family from Samsung has a number of common traits – WiFi b/g/n, at least 160MB of built-in memory, 3.5 mm jack, FM Radio, Swype, GPS (hardware), a separate audio chip for music DNSe, digital compass, office software editing, Android 2.2, battery from 1200 mAh. Samsung also added a task manager, it runs by default and you can see what is loaded into the memory, close everything or particular applications only.

Below are the tables with each phone specs, their images. In the end of the article you will find release timetable with prices. the first Look at Samsung Galaxy Ace and Galaxy Fit you can read on our site too.

Do you want to talk about this? Please, go to our Forum and let your opinion to be known to the author and everybody else.

Eldar Murtazin ([email protected])
Twitter    Livejournal
Translated by Michael Savuskan (msav @ mobile-review.com)

Published — 26 January 2011

Have something to add?! Write us... [email protected]

News:

[ 31-07 16:21 ]Sir Jony Ive: Apple Isn't In It For The Money

[ 31-07 13:34 ]Video: Nokia Designer Interviews

[ 31-07 13:10 ]RIM To Layoff 3,000 More Employees

[ 30-07 20:59 ]Video: iPhone 5 Housing Shown Off

[ 30-07 19:12 ]Android Fortunes Decline In U.S.

[ 25-07 16:18 ]Why Apple Is Suing Samsung?

[ 25-07 15:53 ]A Few Choice Quotes About Apple ... By Samsung

[ 23-07 20:25 ]Russian iOS Hacker Calls It A Day

[ 23-07 17:40 ]Video: It's Still Not Out, But Galaxy Note 10.1 Gets An Ad

[ 19-07 19:10 ]Another Loss For Nokia: $1 Billion Down In Q2

[ 19-07 17:22 ]British Judge Orders Apple To Run Ads Saying Samsung Did Not Copy Them

[ 19-07 16:57 ]iPhone 5 To Feature Nano-SIM Cards

[ 18-07 14:20 ]What The iPad Could Have Looked Like ...

[ 18-07 13:25 ]App Store Hack Is Still Going Strong Despite Apple's Best Efforts

[ 13-07 12:34 ]Infographic: The (Hypothetical) Sale Of RIM

[ 13-07 11:10 ]Video: iPhone Hacker Makes In-App Purchases Free

[ 12-07 19:50 ]iPhone 5 Images Leak Again

[ 12-07 17:51 ]Android Takes 50%+ Of U.S. And Europe

[ 11-07 16:02 ]Apple Involved In 60% Of Patent Suits

[ 11-07 13:14 ]Video: Kindle Fire Gets A Jelly Bean

Subscribe