In the course of saying last week that Samsung Electronics would "never" buy webOS from Hewlett-Packard, Samsung CEO Choi Gee Sung also made some rather open-ended comments regarding the company's software options and capabilities. He said that "it's not right that acquiring an operating system is becoming a fashion," and that Samsung is working to boost its software capabilities "harder than people outside think."
Samsung spokesman Kim Titus clarified further: "As we move forward, our software capabilities are going to become even more visible as we strive to marry software, hardware and content to provide a richer experience."
What do these comments mean for the world's second-largest handset maker and, perhaps soon, the largest smartphone maker? There are multiple paths Samsung might take and if the company executes on its plans, it could vault ahead of its rivals.
At the minimum, the comments suggest that Samsung has realized that it is no longer enough to produce dazzling hardware. Samsung is also probably going to focus its software capabilities on a few key areas rather than spreading its resources too thin.
"Samsung's operating system strategy in the past has been to bet on every horse in the race, and that way you can't lose," said Current Analysis analyst Avi Greengart. "The problem is you can't win that way either."
Here are the main options for Samsung:
- Android: Samsung has made a killing by going big with Google's (NASDAQ:GOOG) Android platform, thanks in large part to the runaway success of its Galaxy S and Galaxy S II devices, and its position is envied by the likes of LG, Motorola Mobility (NYSE:MMI) and Sony Ericsson. However, Samsung's TouchWiz UI does not have the same kind of cachet that HTC's Sense has with users and enthusiasts. Analysts said Samsung will likely invest to change that, and to deepen users' connection to their devices. This is especially true for Samsung's burgeoning line of Galaxy Tab tablets. "We have yet to see anything that looks like the level of customization in the tablet UI side like we have on handset side," said Forrester Research analyst Charles Golvin. Samsung will not just be making UI tweaks but will likely look to more fully integrate Android with its Media Hub services for movies, music and books.
- bada: Another option is for Samsung to further invest in the capabilities of its homegrown bada operating system, which it has pushed largely in Asia and Europe. The company introduced three new bada devices recently at the IFA consumer electronics show in Berlin, and as my colleague Mike Dano pointed out earlier this year, bada has a lot going for it, and analysts say it is gaining traction overseas. Samsung is not going to abandon bada--it's a significant hedge against Android and Microsoft's (NASDAQ:MSFT) Windows Phone--and while it will continue to add capabilities to the platform, the company is likely not going to undertake an all-out effort to make bada a platform to compete head-to-head with Android and iOS. Samsung would need to convince both developers and operators that the ecosystem is large enough and worth developing for and would have to undertake a massive marketing campaign to raise awareness. "It's a pretty serious investment," Golvin said. "I'm not sure they're willing to make it."
- Cloud: The most obvious software area for Samsung to innovate with is in cloud services. Apple (NASDAQ:AAPL) realized that it was falling behind Android in the cloud, which is why it unveiled its iCloud suite. Samsung will need to beef up its own cloud services--especially related to media and content distribution--if it wants to remain competitive. Enhancing its cloud services could also help it integrate its mobile and TV products by streamlining media sharing. However, others are not standing still. HTC's August purchase of cloud sync firm Dashwire and its earlier investments in content delivery platform provider Saffron Digital and cloud gaming company OnLive made its cloud ambitions clear. Who knows what Google will do if, and when, it acquires Motorola? If Samsung is going to be at the vanguard in smartphones, it needs to be up in the cloud.
Why does all of this matter? The combination of customizing Android and Samsung's cloud services and Media Hub could help it deliver a more immersive user experience from a software perspective. Golvin said these enhancements are "elemental" to maintaining brand loyalty, which will be especially important as more people pick their first smartphones and tablets in the years ahead. If Samsung--or any vendor for that matter--can get a consumer to buy into, enjoy and identify with a particular mobile user experience, they will have gone a long way to strengthening long-term brand loyalty.
"Alongside cloud services, which they still have a long way to develop, those UI components are going to be real important elements of maintaining their customer base, so they have to continue to invest in that," Golvin said.
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