Report: Samsung struggles to overcome hardware-first mindset in mobile

Current and former Samsung executives say the company's mobile businesses will likely continue to struggle unless it can "overcome its dominant engineering culture," Reuters reported this morning.

While it is still world's largest smartphone manufacturer, Samsung has largely failed to capitalize on the market as hardware has increasingly become a commodity. Efforts to move into lucrative software and services have been stymied, Reuters' sources say, by leadership that remains focused on the devices themselves.

"There's a lot of distrust of top executives who can actually implement stuff that is more of a software and services offering," according to one unnamed source. "It's still 'we know how to sell boxes, we sell boxes.'"

The piece cites Samsung's ChatON messaging service, which was shuttered in March, and its Milk Video app, which closed a few weeks ago, as examples of Samsung's inability to gain traction beyond peddling devices. And those are just the most recent examples: The Korean manufacturer tried to create its own ecosystem within Android before being muscled out by Google (NASDAQ: GOOG), SAFE (Samsung for Enterprise) appears to have foundered since its 2013 launch, and it folded its home-grown bada OS into a Tizen platform that is still struggling to find an audience.

Meanwhile, the smartphone manufacturing business has become a minefield for any company not named Apple (NASDAQ: AAPL). The iPhone maker claimed 94 percent of the industry's profits in the third quarter, according to Cannacord Genuity, while Samsung saw only 11 percent despite being the top-selling manufacturer. (Apple and Samsung technically accounted for 105 percent of industry profits because all other major vendors posted losses).

Samsung still has some compelling strategies for expanding its mobile business beyond hardware. Samsung Pay is an ambitious effort in a wide-open (but still unproven) market, its Knox mobile security solution could find an audience in the mobile enterprise, and Tizen may carve out a market in the burgeoning IoT. For any of those things to happen, though, Samsung's leadership will need to stop prioritizing handsets and instead expand on what those handsets can do for users.

For more:
- see this Reuters piece

Related articles:
Samsung's Tizen developer conference to focus on Internet of Things, wearables
Samsung releases Tizen-powered Z1 in India for $92, promises more Tizen devices to come
Samsung exec disputes notion of tension with Google over Android
Apple raked in 94% of smartphone industry's profits in Q3, analyst estimates

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