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Today, large companies, especially corporate giants like Samsung, do not surprise users with extraordinary products...

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Spillikins №156. Samsung To Invest $41.4 Billion Into Its Future

It felt weird writing the Spillikins not on the week end but on a working day when news are coming from everywhere. But I think that the Nokia financial report is so important for the whole market that dedicated an entire article to it. But this issue is regular Spillikins about the news I considered worth your while so it makes for two issues of the Spillikins this week. Let's get to it.


  1. Windows Mobile To Become The Second Most Popular Mobile OS in 2012
  2. RIM: One New CEO Instead Of Two
  3. Samsung Is Preparing For the First Big Move Since 1988
  4. Infographics: Smartphones and Nations

Windows Mobile To Become The Second Most Popular Mobile OS in 2012

We should always be skeptical about forecasts, any sorts of them. A forecast never predicts facts and it is never accurate. A forecast merely implies a probability of an outcome. Recently, there was a forecast published by a well known research company predicting that the new Microsoft mobile OS will soon take over Apple platform. This news made caused a lot of stir and for some it was proof that Windows Phone 7 has it under control. iSuppli claims that Nokia 900 will become the renaissance of Windows Phone 7 which will become the second most popular mobile OS by 2015.

To say that I am skeptical about this table is to say nothing. I am more than sure that iOS market share will only grow and quite aggressively. The future competition for the smartphone market will take place between Apple and Google. And though we have not yet seen Apple's response to the recent Android expansion I am sure Apple is cooking something up and it is only a matter of time until they present something new. I expect this will happen sometime in 2012-2013.

Nokia 900 is an intermediate and unimportant product and its release is not a valid ground for market forecasts but I'll leave that up to iSuppli's competence. Alexander Patsay shared an amusing story with me – a little flash back.

In one of their old researches iSuppli forecast that Windows Mobile would become the leader of the smartphone market by 2013 followed by Symbian by Nokia. Back in 2010 it was already obvious that this was not going to happen. But in 2009 this 'daring' forecast was quoted widely although it was completely groundless. Sure, you can find any sorts of forecasts on the web but it is typical of them never to come true.

Further reading:

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RIM: One New CEO Instead Of Two

I have written a lot about RIM's difficulties in the Spillikins and my biggest argument, and many others' too, is the company's inability to respond to market changes. Once RIM has bet on corporate mail they have never changed their course even though they have been collecting lots of negative reviews from analysts and later from their users. The market has not yet received an answer from RIM regarding which way they are going to choose and how they are going to cover the technological gap between them and the leading operating systems. The unique management structure with two CEOs was regarded as peculiarity when things were going well for the company. But in 2011 RIM's share plummeted by 75% and the smartphone market share in the US fell from the record high 50% to just 10% and made the management think about their plans for the future. It is similar to what happened to Sony Ericsson: in 2007 sales were as high as ever for SE and growing yet, the SE management was ignoring critique claiming analysts did not understand their business model. Then, in a moment, the sales began falling rapidly, the the company's image was depreciating just as quickly and subsequently Sony Ericsson hit the bucket. I cannot tell whether RIM will follow this scenario but I hear no good news from the company.

Appointment of a new CEO is always big news for media and investors. In this case RIM's board of directors was under enormous pressure from shareholders who demanded a new manager capable of setting the company for a new course and raising their stock value. The issue is RIM's future as the present looks jolly good: sales are going up, the company is in the black and entering new markets. The question is: will the company be able to assure its market positions in the future. The answer is negative so far.

A new CEO is a great and rare opportunity to change things. He is expected to break the established order and give a fresh perspective on business. That is why companies looking for a new CEO look for him outside their staff. Outsiders are not burdened with the established in the company system of relationships. Insiders are very rarely capable of changing the old ways or get rid of them completely.

Unfortunately, RIM appointed Thorsten Heins as their new CEO. It was not a selection of a strong leader but merely and indulgence to investors. Firstly, he was one of RIM's top managers since 2007 and he is partly responsible for the current situation. Secondly, mister Heins was responsible for products and not the global strategy. And lastly, when being interviewed he mentioned that the current strategy does not need any dramatic changes. You can watch this video of Heins' first presentation as CEO to understand what awaits the company this year.

The most amazing part of this story is the way the two founding fathers are clinging to their beliefs and avoid any changes. It is thanks to Mike Lazaridis and Jim Balsillie that the company does not have a sound development strategy – they have been unable to formulate it and thus hampered RIM's development. They failed to respond to the new market rules. RIM's biggest problem is not resources, finance or employees, no, it is the vision of two persons that have become the core of the Blackberry universe. The two founding fathers determine the company's strategy and as long as their influence on decision making in the company is so big nothing good will happen. RIM's new CEO looks weak and he is not planning any radical changes although the time of pills is over – the company needs a surgery. It seems to me that RIM got a new CEO only to calm the investors down while the management is still unwilling to really change things the company needs to survive.

Further reading:

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Samsung Is Preparing For the First Big Move Since 1988

We all have very short memory and usually operate with facts that for some reasons rooted into our memories. If you ask someone When did Samsung get popular and what made it happen? you will receive miscellaneous answers that will reflect the person's experience with particular products that made him purchase a Samsung product and learn about it.

Naturally, any product is a result of a number of consistent steps the manufacturer takes in this or that direction. A company strategy determines where it is going and what market niches it will be working with. Going through the history of the Samsung company I think 1988 a milestone. It was then when the company singled out three priority directions: domestic appliances, telecom and semiconductors (memory chips in the first place) and in almost a quarter of century Samsung became successful in all of them. Few know that in the late 80s another South Korean company, LG, was also planning on developing semiconductors. But South Korean government discouraged LG from doing so as they though it would weaken the both companies. One of LG's top managers told me that this request was not official and the company could have insisted on their decision. But they did not and as a result Samsung has become the world leading memory manufacturer. Back then Samsung was investing heavily into this industry, building factories and developing new technologies. In 1997 they took a multibillion loan to expand even further. And now in 2012 they are doing it again.

Today the company sees CPUs as a priority along with memory. The Apple A5 CPU, for example, is produced by Samsung in Austin, Texas. In 2012 Samsung is adding a number of new technologies to their priority list and in this year alone Samsung is going to invest $41.4 billion into them. Sounds impressive? This money will be spent on new factories, renovation of the old one and development. Among the new priorities is 'smart glass': transparent display technology Samsung sees as promising. Here is our demo video from CES 2012 on how it works:

Another new line of development concerns new screen technologies like OLED. At first, the new matrices will be used in TVs, and as the production quantities will go up the price for them will go down becoming smaller and smaller. Today we admire the quality of AMOLED screens, in the near future OLED screens will be the standard.

Another priority for Samsung is software. And although the company is yet a newbie on this field they are quietly assembling dev teams to create their own solutions for various OS including UI solutions. However, they will only be able to achieve palpable results in 3-5 years at best.

I don't think that this unprecedentedly high volume of investment will have a negative effect on the company as Samsung is currently on the top: their products are successful and sales are going up. For the market in general this means that we will soon see a great number of new products featuring some unique technologies. Samsung Galaxy S and S2 have set the bar for smartphones for a year in advance and I believe Samsung is capable of sustaining this technological leadership. It is very good that the company is choosing own developments instead of relying on third party manufacturers.

Further reading:

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Infographics: Smartphones and Nations

I have come across a very interesting piece of infographics recently with curious facts about smartphones in different countries. As far as Russia is concerned I don't think they had the right data and this makes me skeptical about the rest of the chart but look for yourself.

I find this next bit by PCMag a lot more fascinating: it concerns active lawsuits among manufacturers. Enjoy.

P.S. I hope that wherever you are it is warmer than it is now in Moscow – it is freezing here. Have a great week and a lovely week-end.

Do you want to talk about this? Please, go to our Forum and let your opinion be known to the author and everybody else.

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Related links

Spillikins №152. Social Aspects of Mobile Technologies: Quiet Revolution

Spillikins №153. Gaming World: How Big Kids Change the World

Spillikins №154. Nokia 800 Sales: The First Data

Eldar Murtazin (eldar@mobile-review.com)
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Translated by Robert Mugattarov (mugattarov@gmail.com)

Published — 05 February 2012

Have something to add?! Write us... eldar@mobile-review.com



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