Company / division: Samsung
As usual, it would be great to understand in more detail the methodology behind this survey, but it’s not available. The Verge seems to have got the rankings wrong – from what I can tell, Samsung was 7th and not 3rd last year – but it’s also worth noting that Samsung’s score dropped from 80.44 to 75.17, which sounds a lot less dramatic than dropping from 3rd (or even 7th) to 49th. The fact is that there are a lot of companies clustered together between 75 and 87 points and so a small drop in the score produces a big drop in rankings. Since the survey was also conducted in November and December last year, when the Note7 debacle was still very fresh in people’s minds, I’m guessing it would score a lot better just a few months from now. Though the Verge picked up on Samsung’s drop as their headline, it’s worth noting where other tech companies sit too: Amazon is #1 (score 86.27), Apple #5 (82.07), Google #8 (82.00), Tesla #9 (81.70), Netflix #18 (79.86), and Microsoft #20 (79.29), all of which classify as either very good or excellent. It’s also worth noting that big cable companies like Comcast and Charter score in the low 60s, which qualifies as “poor”, while the major wireless carriers score 66-72 (“fair” to “good”), with T-Mobile top and Sprint bottom.
Samsung to Use Sony Batteries in Galaxy S8 Phone – WSJ (Feb 17, 2017)
The fallout from the Note7 recall continues: Samsung is apparently adding another battery supplier to its roster, though Sony’s capacity is so small that it will likely be by far the smallest by volume. None of this guarantees anything – the Note7 had problems because both battery suppliers produced faulty batteries and because Samsung’s design put pressure on those batteries. Given that those same two suppliers will be making most of the batteries used for the S8, and Samsung of course will still be designing it, what those three companies do differently is far more important than adding another minority battery supplier. As such, I suspect this is probably better read as an attempt by Samsung to exert some pressure on its existing suppliers by demonstrating a willingness to look elsewhere than any sort of strategy to ensure safer batteries in the S8. In that way, this is analogous to Apple’s recent move to give Intel some of its iPhone modem business. But all this also highlights the difficulties in shifting suppliers at such scale – neither Apple nor Samsung can suddenly switch suppliers at this volume, and even if they could the new vendors often underperform relative to the incumbents (as here with Sony’s batteries and also with Intel’s modems).
Every quarter, there’s a slew of headlines on this basis, usually based on analysis from Cannacord Genuity. The big flaw in this analysis (and the reason I inserted a “not really” into the headline) is that it only looks at those players that publicly report profits from a smartphone unit, plus Apple. As the article points out, the “survey” of six “major” smartphone vendors includes the #1 and #2 but also BlackBerry and Microsoft, which each shipped well under a million smartphones last quarter. It entirely leaves out the third, fourth, and fifth largest smartphone vendors (Huawei, Oppo, and Vivo) and other big names from the top 10 like Lenovo and Xiaomi. Lenovo is publicly traded, but hasn’t reported yet (and is likely to have been unprofitable in smartphones again), but no-one really knows how profitable the others are. So the headline is misleading when it talks about “industry profits” – it’s a very narrow analysis of six vendors, only two of which are in the top 10. Now, that’s not to say that it isn’t likely that Apple captured the vast majority of profits in the smartphone market yet again – it almost certainly did, and this situation highlights both the general challenges with driving meaningful profits from consumer electronics and the specific challenges associated with competing on the basis of Android in smartphones. But this – as with the flawed quarterly market share rankings with their false precision – grates every quarter because it’s shoddy analysis.
Another big tech company starts looking into US manufacturing in the wake of Donald Trump’s election as president. There’s no official statement yet, and Samsung hasn’t been the target of direct attacks from Trump in the same way Apple has, but it’s apparently feeling the heat regardless. It’s interesting to see even non-US tech companies start to respond to Trump’s calls for more US manufacturing – we’ve seen this already in the car industry, but now we’re seeing it with LG and Samsung too. This is a sign of just how unpredictable US government policy has become over the last few weeks compared with the relative stability of prior years.
via Business Insider
I cited some Counterpoint data on India the other day, and in that context said that they do a good job with these non-Western markets – these numbers are solid, although it’s interesting to see these results for China come out before Apple and several other companies have reported their results for the fourth quarter. Unlike India, China is a major contributor to Apple’s overall results, and there’s usually lots of commentary about the rate of growth there, so it’ll be interesting to compere these numbers with what Apple releases next week. In the meantime, there’s lot of interesting stuff here – over the full year, Xiaomi and Apple fared poorly out of the major vendors, though Apple’s Q4 sales held up a lot better than in Q1-Q3. Lenovo’s year in China was a disaster, and it will be very grateful once again that it has Motorola in the rest of the world to buoy things up a bit. The big story is Oppo and Vivo, which have broken into the top rankings globally off the back of a strong showing in China, but Huawei also did very well. It’s also interesting to look at the data in here on individual models, where the two iPhone 6s variants both score in the top 10, and two Oppo phones are in the top 5, including the number 1 slot. The whole post is well worth a read if you’re interested in the Chinese market.
Evan Blass, who used to publish leaks anonymously under the pseudonym Evleaks and has a great track record of accurate reporting, claims these are pictures of the forthcoming Samsung Galaxy S8. The main changes are a full screen front, with the fingerprint sensor moved to the back, while charging switches from micro USB to USB-C, and Samsung retains the headphone jack. The smaller bezel approach has been widely rumored for the next iPhone this fall, and I think what we’re seeing here to some extent is the same rush into smartwatches in the year or two before the Apple Watch emerged, driven by rumors of where Apple was going. In the smartwatch category, we saw a variety of failed attempts to create something compelling only for the Apple Watch to dominate the market when it launched, and you always have to wonder with this pre-emptive following whether competitors will really be able to crack the concept in a way that’s as compelling as whatever Apple releases. Xiaomi already has an essentially bezel-less phone, LG is reported to be moving in that direction, and now Samsung supposedly is too. It’ll be very interesting to see how this space looks at the end of the year once all these phones (including a new iPhone) are on the market.
This is another one of those occasions where Android’s relatively open and complex structure allows for malware which couldn’t exist on iOS. In this particular case, it’s the layering of third party software (a customized version of the SwiftKey keyboard) on top of a customization of the UI and services (by Samsung) on top of the Android base layer. To be fair, this attack isn’t nearly as broad a threat as malware distributed through the Google Play Store – it requires a man in the middle attack and is therefore mostly a risk to those who might be deliberately targeted by hackers – but it’s still not good news, especially given the wide distribution of the devices in question. The complex route security patches have to take in the Android world is another element that will hamper the resolution of this issue.
via Ars Technica
Can Huawei Catch Apple and Samsung? – Fortune (Jan 25, 2017)
This piece somewhat acts as if Huawei came out of nowhere into the number 3 spot behind Samsung and Apple in the global smartphone market, and while it’s risen rapidly to the top in individual markets, its global rise has been happening for much longer. It’s been the number three for the last six quarters (likely seven once Q4 2016 is reported on), and has been in the top ten since at least 2011. It may well have crept up on US observers, many of whom don’t tend to focus on emerging markets as much as the US and Western Europe, but this story has been underway for quite some time. Huawei is the big global success story among the ranks of Chinese smartphone vendors, most of whom have done well in China and some emerging markets but less well elsewhere. But Huawei still hasn’t cracked the US, where the carriers I’ve spoken to seem to be reluctant to put a relatively unknown Chinese brand on shelves next to premium products from Apple and Samsung. I don’t think Huawei needs to succeed in the US to be successful, and perhaps not even to catch Apple in raw market share terms, but it’s obviously never going to match Apple in terms of profits.
While Samsung was rightly hammered over its early handling of the Note7 battery issues, since it decided to kick into full gear and issue a full recall, its performance has been far better. This official statement from the chairman of the CPSC, the US body responsible for recalls, praises Samsung and the US wireless carriers for their response and their success rate in getting devices recalled – 97% of devices have now been returned. Taken together with Sunday’s announcement of the conclusion of the investigation, which was thorough even if it didn’t go far enough on the culture side, this seems like a decent conclusion to the saga. It’s worth noting that most of the statement is devoted to complaining about the CPSC’s small budget and lack of resources to do its own in-depth investigations.
Why The LG G6 Won’t Have Snapdragon 835 – Forbes (Jan 24, 2017)
This is sourced reporting from a Forbes contributor who (as far as I am aware) doesn’t have a long track record in scooping news like this, so take it with a pinch of salt. But on the face of it, this makes sense – Qualcomm’s 835 chip is brand new, and Samsung would logically need bucketloads of them for its next Galaxy S phones, potentially gobbling up all the supply available and squeezing other OEMs out in the short term. Apple is famous for securing long-term access to the components it needs and squeezing others out in this way, and given the timing and Samsung’s scale in smartphones, it makes sense that it would be able to secure all the available supply of 835 chips on a short-term basis too. That’s going to be tough for other OEMs launching handsets in the first half of 2016 – even though the article downplays the jump from the 821 to the 835, there are some significant additions in the new chip which will create better performance in areas like battery life, VR/AR, and so on.
Samsung released preliminary numbers a few days ago, and rather shocked everyone by previewing some of its best results in a long time (and its best operating margin ever). Until today, though, we didn’t know the precise breakdown by segment behind those numbers – now we do: the mobile business rebounded decently from last quarter, but is still a shadow of its former self in terms of both revenues and profits, while the semiconductor business is going gangbusters. The latter provided a quarter of revenues but a little over half of operation profits for Samsung Electronics last quarter, and was the major driver of that fantastic overall operating margin. An increasing focus on premium products and rising prices driven by tight supply versus demand both helped that division, while on the mobile side Samsung seems to have done a good job selling Galaxy S7 phones to those who might otherwise have bought a Note7. It looks like Q1 might be a little tough on the mobile side – we won’t get a Galaxy S8 at Mobile World Congress in February, meaning Q1 will be the lull quarter before a likely launch in Q2. But overall this is a pretty decent set of results for a company dealing with the fallout of the Note7 recall.
via Samsung Electronics Announces Fourth Quarter and FY 2016 Results – Samsung (Samsung’s earnings deck with lots more detail here and there’s more coverage on Techmeme. You might also be interested in the Samsung Q4 2016 deck which is part of the Jackdaw Research Quarterly Decks Service)
Samsung Electronics Announces Cause of Galaxy Note7 Incidents in Press Conference – Samsung (Jan 23, 2017)
See the Techmeme link below for full coverage of the press conference by reporters; the full press conference can be viewed here, with the conference starting around 29:30; and there’s some more detail on testing and other elements here. The related narrative has also been updated today to reflect the latest news.
My to-do list for Samsung at this press conference was as follows: demonstrate that the company really had found the root causes of both sets of battery fires, in a way that was credible; where possible have third parties involved; and talk through the changes to manufacturing processes to avoid these issues in future. It checked off each of these items at its press conference, so in that sense it did exactly what it needed to do: so far, so good. On the other hand, the results indicate that the manufacturing processes at Samsung’s battery partners were in some cases pretty shoddy, and that its own designs put pressure on batteries. So it’s not just the battery manufacturers at fault here, and a big part of the problem is lack of quality control –Samsung’s third party investigators were able to find faults in batteries that hadn’t caught fire, and replicate the conditions in which devices caught fire. The big question is therefore why Samsung wasn’t able to do so. All this suggests a lack of care around product testing and likely also a rush to market for competitive reasons which then shortchanged the manufacturing process. I have confidence that Samsung will make big process changes going forward, but less confidence that the culture that led to these problems will change in the same way.
via Samsung Electronics Announces Cause of Galaxy Note7 Incidents in Press Conference – Samsung Global Newsroom (full coverage on Techmeme here)
We’re finally coming to the end of this saga, with one of the most visible and painful reminders of the fate of the Note7 going away. Though the 96% return rate likely is a major factor in the decision, the fact that most Note7 devices remaining now won’t charge either thanks to the recent carrier updates is likely another – those who have these phones will find it very hard to do anything dangerous with them. The last remaining chapter in this story is now Samsung’s long-awaited disclosure of the root causes for the fires, and its plan for avoiding similar issues in future.
Apple has invested enormously in its green initiatives under Lisa P Jackson, arguably one of the biggest and most visible changes under Tim Cook, who seems determined to use Apple’s power for good beyond the influence of its products alone, to a much greater extent than Steve Jobs was. For Apple to come out on top of the major tech companies is still quite an achievement, though Google and Facebook also did well. It’s not clear that most consumers care all that much about any of this, but there’s an argument to be made that these companies are seen as leaders in the field, and Greenpeace’s endorsement puts pressure on others to fall in line, which has broader environmental benefits.
These are remarkable results in the quarter after the Note7 fiasco began, and the quarter in which the recall itself really began. Revenues are very close to last year’s, while operating profits are the third highest ever after two quarters back in 2013. We’ll have to wait for the final results to come out later this month to see the breakdown, but the Reuters report makes it sound like both smartphones and semiconductors did well, which would be impressive if it’s true.
There’s a little too much hype in the headline here – this isn’t the future of laptops as much as the present, but as Chromebooks rather than Windows machines. The sort of convertible model Samsung is using here has been growing among Windows PCs for years now. In some ways the more interesting difference is that these laptops are being priced more like mid-range Windows PCs rather than cheap alternatives, as Chromebooks have been in the past. OEMs seem to be banking on Android integration to sell these machines now that price isn’t really a factor anymore.
Samsung has sold smart TVs for years, but they’ve generally been standalone devices, rather than being driven from a smartphone or app, despite an earlier project which was intended to use tablets as a remote. This new functionality looks like Chromecast, and may well be a response to competing TVs using actual Google Cast technology. As with most of Samsung’s services, though, it’s unlikely to be a big hit.
Shara does a great job here of stating the challenge Samsung faces heading into CES, where it holds the biggest press conference of any exhibitor but tends not to make smartphone announcements. I’m concerned that we still don’t have an official explanation for the Note7 fires, which means the story will keep sticking around, and will keep making people – especially those who’ve never bought one – think twice before buying a Samsung phone.
Much of this piece piggybacks off the Flurry data I linked to earlier, but there are some additional comments from an NPD analyst which form the basis of the headline. The point here is that Samsung did suffer from the Note7 recall, but not nearly as much as it might have, because most buyers stuck with Galaxy phones rather than switching to iPhone. This reinforces the point that Apple and Samsung (in that order) have the highest smartphone loyalty rates by far, which has certainly helped Samsung this year.
T-Mobile rolls out battery shutdown update to remaining Galaxy Note 7s | AndroidAuthority (Dec 27, 2016)
This is the beginning of the end for the Note7 saga, which began all the way back in early September. The four major US carriers, starting with T-Mobile, are rolling out what are effectively kill updates that will shut down the remaining Note7 devices in use. Over 90% of those devices have already been turned in, so this is really about capturing the holdouts. This is also the beginning of the end for the PR nightmare that’s kept this story in the news far longer than Samsung would have liked.