Company / division: Samsung
I’ve already commented this quarter on Samsung’s preliminary results, which let us know that it would report record high revenues and operating income. But we had to wait until its final and full results for the quarter were out to know the contributions made by its various divisions, though I’d had a good guess in that first comment. As expected, the Semiconductors division (which includes memory, ASICs, and Samsung’s new separate foundry business) was by far the strongest performer in the quarter, growing 47% year on year and contributing 57% of operating income for the company on just 27% of its revenue. That was driven, as expected, by a combination of market growth and price increases, with memory making up nearly 80% of sales. But the IT & Mobile division, which has been stagnant or declining in recent quarters, also contributed to revenue growth, up 17% year on year, the best in several years. A big contributor was the shift of the company’s Galaxy S launch from Q1 to Q2 this year, which had sent Q1 revenues down 15% year on year but boosted the year on year comparison this time around. Profits and margins, though, were both down on last year in the mobile division, suggesting perhaps because of the expenses associated with the launch shifting from Q1 to Q2 as well, and perhaps because the company is making a big marketing push around one of its most compelling flagships in several years. My bet is that the rest of Samsung’s year will go as well as its first half, based largely on the combination of higher chip prices, growing components shipments, and a big boost from Apple OLED orders for its new phones. Some of those drivers will ease next year, especially if other suppliers are able to ramp up OLED production to help meet Apple’s needs in the next generation of phones, but Samsung’s on a pretty healthy trajectory right now and there’s not much sign of that stopping. The biggest short term question is how it will position the Note 8 that’s due to launch next month, given the increases in usable screen size in the Galaxy S line and last year’s troubles, and how competitive it and the Galaxy S8 will be versus the new iPhones launched a month later by Apple.
via Samsung (PDF)
When the Samsung Galaxy S8 devices were preparing to launch, some were caught off guard by the fact that the English language version of its Bixby voice interface wouldn’t be available when it went on sale. Later, Bixby was released as a limited public beta in the US, and today it’s going to be available as an update to all US owners of the devices, roughly three months after the devices went on sale. At launch, Samsung faced a conundrum: ship a version that wasn’t ready and risk people’s first experiences with Bixby putting them off for life, or delay one of the headline features of the phone for several months, and in the end it plumped for the latter. That was smart, and there seems to have been little backlash about the delay from users (perhaps suggesting they mostly don’t care about it). Reviews based on the early beta release suggested there were some big issues and bugs, but the Journal piece linked here is more positive about it. The big issue remains Samsung’s framing of Bixby as an interface rather than an assistant, after years of smartphone users being trained to see the two as essentially synonymous. But Bixby is definitely not a broad assistant: it can’t answer questions about the world (or in many cases your slice of it), but is very good at controlling device functions and settings, at least within Samsung’s own apps. My brief testing suggests Bixby still pretty glitchy, even in the setup process. The list of third party apps offering Bixby integration hasn’t got much longer since my testing of the device at Samsung’s launch event, and that will be another key challenge here: an assistant that only works for some apps but not others ends up not being very assistive: consistency is the key, something that other assistants have demonstrated through their inconsistency too. If users do adopt Bixby for the things it can do, it’s likely they’ll do so alongside the Google Assistant, which can handle most of the rest, but I could also see many users giving up on Bixby and using just Google’s tool as the one voice interface most likely to help them get things done on their phone. Relatedly, there are reports today that Samsung won’t in fact be making a Bixby voice speaker, something it was reported to be working on earlier, and which I had said made little sense in the context of Bixby as an interface rather than an assistant.
Siri Usage Reported to Fall as Alexa and Cortana Grow (Jul 12, 2017)
Samsung Reportedly Working on Bixby-Powered Home Speaker (Jul 5, 2017)
Samsung Announces IoT-Optimized Exynos processor (Jun 23, 2017)
Samsung announced its Connect Home mesh WiFi and smart home hub product alongside the new Galaxy S8 phones in March, but didn’t provide pricing or availability, something it’s now done. It will go on sale on Sunday at Best Buy and then become available more broadly in mid July, and will cost $170 for a single unit and three for $380, with a higher-throughput Pro version available for $250 per unit. The pricing is comparable with the many mesh WiFi solutions that have emerged in recent years, but the big difference is the SmartThings integration, which would normally involve a separate purchase. I’ll wait until reviews are available to judge it beyond that, but as I mentioned in the comment linked above back in March, it’s good to see Samsung finally starting to tie together its SmartThings and smartphone businesses, and I look forward to seeing whether that helps SmartThings get more traction in the market. The pure mesh WiFi space is certainly crowded enough already.
Samsung’s Bixby Further Delayed in US to End of June (May 31, 2017)
Samsung Announces Windows Convertible With S Pen Stylus (May 30, 2017)
Samsung Surface Competitor Gets Poor Reviews (May 26, 2017)
92% of US iPhone Users Plan to Buy Another (May 19, 2017)
We’ve seen some of these stats before, and they bounce around a little from survey to survey, but it’s always good as a reminder of just what makes the iPhone installed base so valuable: the combination of very high loyalty to the platform and the ability to sell a variety of other devices and services to iPhone users. This Morgan Stanley survey released this week says that 92% of current iPhone owners plan to stick with the iPhone when they buy their next smartphone, among the highest levels MS has seen, while Samsung comes second at 77% and other Android vendors score considerably lower. That means that even if smartphone upgrade cycles are lengthening, nearly all of the 100 million or so US iPhone users will eventually buy another, many of them likely this fall with what’s expected to be a big upgrade. With iPhones roughly two thirds of Apple revenue, that’s already tremendously important to its future prospects, but the other key part of this is that those iPhone buyers are likely to buy apps and content from the App and iTunes stores, subscribe to Apple Music, iCloud storage, and so on, and also buy other Apple devices like Watches, iPads and Macs. One of the challenges Apple faces, conversely, is that this loyalty rate isn’t as high in every country, with China one notable exception. Though I’ve only seen one survey referenced on this topic, and I’n not convinced the absolute numbers are right, it certainly seems to be the case that iPhone loyalty has been lower in China recently, with at least some iPhone owners shifting down to a cheaper Android phone from rising stars Oppo and Vivo. If Apple can turn that trend around with this fall’s phones, of course, that could lead to a massive rebound in growth in China.
Though Google spent much of its I/O keynote talking about apps and features like Photos and the Assistant, it did devote a few minutes to the topic of AR and VR, which will have a second deeper-dive keynote of their own tomorrow. On the VR side, the key announcement is that Google is extending the Daydream platform beyond mobile VR to standalone headsets, which in the first instance will be built by partners Lenovo and HTC and supported with chips from Qualcomm. Daydream so far has been limited by the fact that the biggest Android smartphone vendor has its own competing platform, so the news that Samsung’s Galaxy S8 phones will support Daydream through a software update in the summer is a big deal. My guess is that Samsung will still favor its own Gear VR system with its usual bundling and discounting deals, but the fact that Daydream View and other compatible headsets will now work with Samsung devices should increase its appeal. Daydream’s system is better than Samsung’s in a number of ways, though the recent Gear VR update closes the gap a bit, so the playing field should be a leveled a little going forward. Also worth noting are a couple of AR announcements, including a new “Tango phone” to support Google’s indoor mapping technology, and VPS, an indoor equivalent of GPS which will enable precise directions within large stores and the like. Neither of those feels remotely mass market yet, which means Google’s AR efforts are far more marginal than the phone-based efforts from Facebook and Snapchat (and likely soon Apple too). Interestingly, VR head Clay Bavor outlined his vision for the space in a blog post today too, and it’s remarkably similar to Microsoft’s in that it envisions a continuum or spectrum that includes both VR and AR, though Bavor’s favored term is immersive computing rather than mixed reality and he’s less pejorative about the VR and AR terms everyone is already using.