Mobile: Has Spreadsheet Fever Hit Samsung?
July 5, 2013
As far as I know, Samsung Electronics Co Ltd has only dabbled in mobile search. The investment in research and development facilities in Korea and Silicon Valley caught my attention. The company has been riding high on mobile sales, winning in spats with Apple, and knocking out customers with a range of products. The days of the microwave as the defining Samsung technology are long gone. See, for example, “Samsung Looks to the Future with $4.5 Billion Investment in Five New R&D Centers.”
Mobile phone R&D is going in some surprising directions. We have heard that Google [x] Labs (don’t you love the spelling which obfuscates finding information about the whizzy new Google facilities difficult) is poking into some pretty esoteric stuff. We know this low profile activity is underway because we have discovered two instances of key [x] Labs’ professionals publishing information under different versions of their given names. What’s up with that? Typographical errors. I plan to release a report similar to my dataspaces and Guha analyses in the near future. Keep in mind that the investment in Motorola is not making headlines. The acquisition may become a business school case study, but the mobile world seems to be exploding. Even Apple is poking into advanced materials, different types of interfaces, and new services. Will there be low cost phones, new online information services, and premium priced hardware? My bet is yes.
Now I learned in “Samsung Electronics’ Second Quarter Misses Forecast as Smartphone Worries Deepen” that the Korean giant is troubling some of the MBA crowd. The Reuters news story — presumably accurate — states:
Now investors fear Samsung may also follow in the footsteps of Apple and other once-mighty players that are struggling with shrinking margins, in an industry where companies live and die by their ability to stay ahead of the innovation curve.
What’s going on?
I see some parallels with the revenue-itis which has been plaguing search and content processing companies for two years.
First, the mobile market seems to expanding. The business school hockey stick curve is alive and well for Apple, Google, and Samsung. MBAs know that hockey sticks do not have infinite handles. But when cranking out financials, it is oh-so-easy to let Excel predict continued growth. The search and content processing vendors know that growth is pretty much over in some search sectors. I have a list of words that search vendors use to disguise the fact that the firms are selling technology which has not changed significantly in years. The Samsung alarm suggests that mobile may not have the lift it did before. Ergo: interface, services, bioengineering, and other “new” ways to keep that revenue pumping. Like search, mobile phone dependent companies may have their work cut out for them. The value adds do not come easy.
Second, the reality of most high-tech markets is that the economic downturn is continuing to affect companies big and small. The reason is that the customers are either short of cash and spending for cost reductions or suffering from “technology fatigue.” The barrage of “new and improved” is just not sticking in organizations in which people are worried about their jobs. Why make a decision when that decision may cause people to get fired. Isn’t it better to do nothing? Is that mobile phone worth the extra money and hassle to relearn a gadget? I think fatigue and resistance to change are significant factors. The rise of Chinese manufacturers offering multi SIM phones is becoming a big deal. Have you looked at products produced by Huawei Technologies or ZTE?
Third, the datasphere is reeling from the privacy and security issues which are hanging around. At a dinner party last night, a 70 year old asked, “Should I stop using my mobile phone?” I just listened and what I heard was a serious concern that the online magic of the last 20 years may be morphing into a trick. I never believed in magic, but a 70 year old who is worried about calls to her grandchildren is something new in the mobile world. If this type of concern escalates, what happens to mobile online advertising and uptake of new gizmos? What happens to the projections the MBAs bet their BMWs on?
Net net: I think the Samsung forecast, if accurate, is important. If Samsung turns around the negative outlook, I will breathe a sigh of relief. If not, will the high flying mobile sector with its predictive search and mobile advertising revenues head down downwards?
Search and content processing vendors are in serious financial quicksand. Nokia like other smaller mobile outfits is struggling to pull its hip boots out of the muck. Microsoft is exerting a great deal of effort to get to solid ground tool. Will Apple, Google, Samsung, and a handful of others avoid the perils of spending many quarters in the revenue swamp?
I will be watching this adventure from dry land I might add.
Stephen E Arnold, July 5, 2013
Sponsored by Xenky
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