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Samsung may be out of smartphone business in five years: analyst

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04 November 2015

Samsung, among the leading smartphone manufacturing brands, is seen to be 'going downhill' and in the next five years, might also be out of the smartphone business.

The downtrend could be due to most Android players offering affordable devices on par with Samsung. Further, no amount of innovation in their devices would help as the Android users think that the smartphone was 'good enough' already.

Also the company's brand new Tizen OS to the world had not been a complete success.

According to Ben Bajarin,  principal analyst and the head of primary research at Creative Strategies, ''Android's new premium price point is between $300-$400 and the new mainstream Android smartphone price point is under $300. No other Android OEM, Samsung included, will sell in volume anything above those prices. At those prices, cutting edge innovation will be void, meaning the gap between iPhones and Android will grow.''

Bajarin wrote in TechOpinion that Samsung was suffering from ''The Innovator's Dilemma'' and there was  absolutely nothing it could do to fix the downtrend in its premium handsets. Innovation would not be able to save the company, as a ''good enough'' mindset had settled into Android land.

The Innovator's Dilemma is that as a market matures, the early innovators got disrupted by competitors who entered their space with lower-priced products with similar specs eating into their market share.

Once the market embraced good enough products, the innovator could no longer push premium innovations as their value was diminished with the ''good enough'' mentality gaining ground. The $200-$400 range Android devices were good enough for the masses, which left Samsung's $600 with no takers.

One of the most interesting observations was that the Innovator's Dilemma was supposed to impact Apple. When the market for smartphones became filled with good enough devices at very low prices, why would anyone buy an iPhone? However, it was Samsung that was getting hurt, exactly according to the guidebook - not Apple.

The innovator's dilemma, in this case, only applied to Android land because all the hardware OEMs ran the same operating system, unlike apples iOS, Bajarin opines.





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