It feels like trouble ahead for smartphones in general and Samsung specifically.
The view from Barcelona showed Samsung looking like king of the hill. It announced at the Mobile World Congress its Galaxy S6 handsets, the first in the world run on chips built in a 14nm FinFET process. So how can a company leapfrogging Apple in smartphones and TSMC in process technology be in trouble?
Analyst Robert Maire says the new Samsung phones don’t have enough panache to shift momentum away from the red-hot iPhone 6. What’s worse, he suspects Samsung’s 14nm yields are low, making the process in which rival Apple is said to be making its A9 SoC for its upcoming iPhone 7 unprofitable for many months to come:
We think Samsung got carried away in its need to win back Apple's business and is put itself in the position of “betting on the come” and hoping that it can get yields high enough to get to profitability on the part. In the meantime the A9 will chew up a large swath of Samsung's fab capacity at low yields that could better be used to provide devices to Qualcomm at reasonable profit levels.
About the same time Samsung showed the Galaxy S6 to great fanfare in Spain, Gartner released the latest market share figures on smartphones. Samsung lost the top spot to Apple for the first time since 2012, and China suppliers Lenovo, Huawei and Xiaomi are nipping at Samsung’s heels.
Beyond the battle over market share, I’m most troubled by what I am not seeing – any signs from #MWC15 of a next big thing for smartphones.
With the Galaxy S6, Samsung threw in the kitchen sink. In an effort to regain momentum it built in a curved display (big deal), a fast-charging battery (nice but hardly a must-have), and a 14nm SoC (a ho-hum for users).
A few years ago I saw young people carrying big-screen Samsung phones in Hong Kong subways and realized this would be a driver. It took Apple two generations to adopt the wave Samsung started, a decision driving its iPhone 6 sales now. But the Samsung curved display and its mini-menu (below) doesn’t provide nearly as much of an Edge, as it were.
The smartphone market is still expanding, but I’m concerned about a lack of drivers. At the Game Developer Conference, graphics guru John Carmack of Oculus said mobile VR will be a next big thing with the Oculus powered Samsung GearVR coming with the next big Samsung smartphone release. Indeed, the VR demos I saw at GDC had a lot of sizzle, but I’m not sure that will translate into the steak of sales growth.
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