Samsung shifts from smartphones to software

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Samsung is looking beyond its line of popular smartphones to its operating system for growth, according to Japan Today. 

“Coding is the key of the future,” Samsung president of mobile communications Dongjin Koh told the audience at the company’s annual developers conference last week. Samsung now considers itself more of a software company than a hardware manufacturer. While its mobile segment had a strong first quarter this year, Samsung's forward-looking statements show the company expects smartphone sales to remain flat or decline moving forward. 

Samsung’s proprietary Tizen OS will allow it to tightly integrate software, services, hardware, and security into a single ecosystem. This will give it greater control over both ends of devices in a similar way Apple maintains control over its products and services. Tizen is a Linux-based open source platform used in the latest generation of its Galaxy Gear smartwatches, as well as its low-end Samsung Z series, sold in India, Bangladesh and Sri Lanka. Tizen also powers the company’s connected car services.

However, in order to properly build out an ecosystem of software products, Samsung will need to rely on developers to produce apps for its Tizen operating system. Furthermore, the company will need to adjust the OS to make it compatible with its growing portfolio of connected products. Samsung may have a leg up in this department as it manufactures a majority of its components in-house. 

A number of stalwarts of the smartphone industry including Intel, Microsoft, and Qualcomm, have made a noted shift away from manufacturing hardware to focus on selling software and cloud services. In particular, Intel confirmed Saturday that it would be canceling its upcoming Atom chip for both smartphones and tablets. Across the two years the company reported on its mobile division, Intel reportedly lost a total of $7.3 billion.

This is an understandable shift, as the global smartphone market is expected to slow considerably over the next few years. Despite a record-setting holiday quarter, 2015 was likely the last year of double-digit growth for smartphone shipments.

Mature markets were at the heart of this year’s deceleration. Adoption has reached new highs in key markets in the United States, Europe, and China. The pool of first-time buyers in these countries is shrinking rapidly, and sales are now primarily coming from phone upgrades.

Meanwhile, emerging markets will continue to see robust shipment growth. India and Indonesia, in particular, will help fuel a large share of the shipments growth within the global smartphone market over the next few years.

Will McKitterick, senior research analyst at BI Intelligence, Business Insider's premium research service, has compiled a detailed report on smartphones by country that forecasts the market through 2021 to reflect slower, stabilizing growth in the long term.

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Here are some key points from the report:

• The global smartphone market is still growing at a steady pace due to more widespread adoption in emerging markets. We estimate the global market will hit about 2.1 billion units shipped in 2021.
• Shipments growth over the past few years has been driven by the falling price of smartphones, which has made handsets more accessible in emerging markets. The average selling price of a smartphone in India nearly halved between 2010 and 2015.
• With relatively low smartphone penetration, we forecast Indian smartphone shipments to grow rapidly over the next five years. Nevertheless, India has a long way to go before it surpasses China as the world’s leading market for smart handsets. India is estimated to account for roughly 10% of the global smartphone market in 2016, considerably less than China’s 30% share.
• The global platform wars are over, even as smartphone adoption continues to rise across various markets worldwide. Android and iOS are estimated to account for 97.3% of global platform market share in 2015, compared to 96.3% last year.
• Apple closed the year with another strong quarter on the back of its iPhone 6s and iPhone 6s Plus launches. Still, the vendor saw a slight decline in YoY growth of its share of the market in the face of stiff competition from Samsung and Chinese vendors such as Huawei.

In full, the report:

• Forecasts global smartphone shipments through 2021.
• Explores why India is the next high-growth smartphone market.
• Breaks down the global smartphone platform wars.
• Discusses smartphone vendor performance market share.

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