Samsung sells more Android smartphones than most other manufacturers, but offering new models with powerful processors, more memory or larger screens may be loosing its appeal in this highly competitive marketplace.
While the Galaxy S5 is an evolutionary product, there is not enough meaningful changes in the latest model to make people want to upgrade from version 4 of this popular smartphone. It doesn't push the innovation envelope, according to the latest market assessment by Frost & Sullivan.
That is not to say that smartphone innovation has stalled. Instead, much of the upcoming advancements will come from the introduction of sensors into the phone, the improvements in software and how the device will interact with wearable technology accessories.
The innovation will move away from hardware towards the kinds of services and platforms that are enabled on the smartphones, via application (app) software enhancements. Services such as ordering taxis, arranging mobile payments, and location-based service capabilities will add substantive value.
In the premium smartphone segment, Samsung's scale and supply chain strength is less of an advantage. The key to success is perceived differentiation -- it's less about features and more about design and brand.
As competitors such as HTC, Huawei and ZTE catch up quickly on design, Samsung's brand differentiation is critical.
However, Samsung is unable to modify the OS software platform, with Google driving Android consistency. In fact, 25 percent of Android handsets sold in China last year did not include any Google services. And, the company is preventing new fragmentation of Android, making it even harder for Samsung to truly differentiate itself.
Margins are under continuing pressure and price leadership is difficult to maintain in emerging markets with OPPO, Wiko, and Micromax all producing low-cost handsets in the $100-200 segment. Moreover, the bulk of Samsung's business -- despite the high profile nature of its Galaxy line -- is in the mid- to low-end.
This is where Samsung is losing share as other manufacturers build capacity and experience, and can utilize lower labor costs. The bulk of growth in the market will come at the $200 and less price points, and these segments are simply less profitable than the high-end.
So, how will Samsung add incremental value in the evolving mobile apps economy? How will they adapt to the emerging wearable tech trends? We'll have to wait and see.
