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Today’s release of the Samsung Galaxy S8 today is highly anticipated, but it should also be fairly routine, as Samsung has released seven previous models of the flagship Galaxy S smartphone line.
But these are not ordinary circumstances. Samsung is still recovering after exploding Galaxy Note 7 phones damaged Samsung’s brand last fall. And the company is facing growing competition both from the high end of the market — especially Google’s well-reviewed Pixel phone — and from dirt-cheap Chinese phone makers.
So the launch of the S8 is a fairly high-stakes moment for Samsung. It’s the company’s best chance this year to change the conversation away from exploding batteries and shore up its status as the top Android smartphone maker. But it’s not going to be easy.
Samsung’s rise to the top of the smartphone heap was aided by the fact that Samsung often had the fastest chips, highest-resolution screens, and widest range of high-quality hardware. But as the market matures and competition intensifies, the hardware advantage is becoming less of an edge. Power and profits increasingly lie with companies like Apple, Facebook, and Google that make smartphone software and services.
Samsung has traditionally struggled to create software that sets its phones apart from generic Android devices. Today, Samsung is hoping to change that by introducing Bixby, a voice assistant that will compete directly with Apple’s Siri, Google Assistant, and Amazon’s Alexa.
We won’t know if Bixby is a compelling product until reviewers and customers have a chance to try it for themselves. But history suggests reason for skepticism. Samsung has a decentralized corporate structure that’s great at churning out cheap, high-quality hardware. But that structure makes it difficult for Samsung to make the kind of long-term, company-wide investments required to produce a successful software platform.
Why Samsung struggles with software
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Samsung has subsidiaries that produce a variety of different components, such as batteries, screens, and memory chips. Samsung gives its various business units a lot of autonomy and judges them by their financial performance.
Samsung’s smartphone division combines parts from other Samsung business units to make a finished product. At any given point in time, Samsung has many different teams designing a bunch of different smartphone models in parallel, in an effort to serve many different market niches at the same time.
This structure makes Samsung very good at quickly bringing high-quality smartphones. But it becomes something of a liability any time Samsung tries to build new software platforms, a situation illustrated by this insightful December 2015 article by Reuters reporters Jeremy Wagstaff and Se Young Lee.
“Interviews with former and serving employees paint a picture of confusion and overlap between competing divisions, where the short-term interests of promoting hardware trump long-term efforts to build platforms that would add value for customers and increase their loyalty to the brand,” the pair wrote.
“One said he only learned from someone outside the company that the hands-free app his team was updating for the upcoming Galaxy S4 launch had competition — from inside Samsung.” The manager became frustrated the software was seen “as little more than a marketing tool” within Samsung.
This stands in stark contrast to a more monolithic company like Apple. When Apple decides to introduce a new smartphone service like Siri or Apple Pay, the entire company mobilizes to support the new standard. Inside the company, everyone knows the new software will soon be installed on tens of millions of iPhones, so they spare no effort to make it as good as possible. Outside the company, everyone knows the software will soon be installed on tens of millions of iPhones, so they’re more willing to sign up for complementary services — like merchants signing up to accept Apple Pay payments.
Samsung seems to realize that it has a problem and is trying to correct for it. The company has gotten better at creating company-wide standards that will be supported by all of its devices. A report last year found that the Samsung Pay payment service was behind Apple Pay but was attracting a significant number of customers. And while Bixby will be introduced on the Galaxy S8, Samsung is positioning it as a service that will be available on a wide range of Samsung devices, improving its chances of building a substantial base of users.
Still, Samsung’s Bixby announcement last week didn’t exactly give the impression that the company is about to raise the bar for voice assistant quality. For example, Samsung claims that “most agents require users to state the exact commands in a set of fixed forms.” The problem with this is that leading voice assistants like Apple’s Siri and Amazon’s Alexa already do a pretty good job of interpreting natural language commands.
The big challenge for Samsung is that creating software that’s almost as good as the software that ships with the standard version of Android is basically worthless, since customers would rather just get the standard Android service. To achieve a durable competitive advantage, Samsung needs to develop software and services that are actually better than what you can get from Apple and Google. But that will require mobilizing significant financial resources behind a project and sustaining the investment over many years.
Samsung has never been good at this kind of coordinated effort. And having the company’s leader facing bribery charges isn’t going to make things any easier. So I’m not expecting Bixby to surpass Siri any time soon.
