Samsung's plan to compete with iOS

By Bloomberg | 15 Feb 2020 at 16:13hrs
On a day when Samsung Electronics Co. announced four new high-spec smartphones, the company also signaled how it intends to compete with Apple Inc.'s iOS ecosystem through software partnerships.

The new Galaxy S20 devices will feature deep integration of Netflix Inc., allowing users to search for movies by voice queries to the Bixby digital assistant. Bixby's morning routines will also include Spotify Technology SA music streaming, and Microsoft Corp.'s Xbox Game Studios will debut its Forza Street title on Samsung's Galaxy Store for apps.

"It's been amazing to see Samsung continuously push the limits of what's possible," said Hiroshi Lockheimer, Google's Android chief. Google's operating system has been helped by and risen in parallel to Samsung's emergence as the world's most prolific smartphone maker.

Rival Apple is on a mission to develop its own content such as Apple Music, Apple TV+ and Apple Arcade, a set of in-house subscription services that the company is spending lavishly on to make it a success. Each of them benefits from its hundreds of millions of iPhones already in users' hands and they help enhance and strengthen the company's protected ecosystem.

Samsung has made similar efforts, such as its Samsung Milk music service, and repeatedly failed. Its chronic problem in competing with Apple has been the absence of unique and differentiated experiences — an iPhone owner has access to Netflix and Spotify as well as to the Apple-exclusive iOS services.

The partnerships announced alongside the flashy new Galaxy phones "will be critical if the company is to elevate itself beyond hardware, diversify revenue and level the playing field with Apple," said Ben Wood of CCS Insight.

Analysts now believe Samsung is on the right track by looking to deepen collaboration with content distributors threatened by Apple's strategy. "It hasn't been proven to work yet, but it's a much better strategy than Samsung trying to compete in content and enterprise apps itself," said Avi Greengart, mobile industry analyst at Techsponential. "The cost and risk of trying to recreate Spotify, Netflix, Office or xCloud is astronomical."

IDC analyst Raquel de Condado Marques liked the synergy between Samsung's newly upgraded hardware and service partnerships, especially in gaming. With faster mobile internet speeds and better displays, "Samsung is leveraging what it does best — hardware — and allowing new partners to do the same by relying on Microsoft's PC installed base and Xbox gaming heritage to provide a more complete platform across different technologies."

Microsoft is developing its xCloud game-streaming service, a rival to Google Stadia, which will let people experience desktop-like graphics and sophistication on their mobile devices. Netflix has a whole set of criteria as to what makes a Netflix Recommended TV, which it uses to incentivize electronics makers to present its content in the best possible form. Both companies can benefit from having a role-model mobile hardware platform, such as Samsung's Galaxy S20 family, to demo their best mobile offerings and to direct other manufacturers to emulate.

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Not all are convinced by Samsung's approach to tie-ups. "There was no shortage of big names," said Wood of CCS Insight. "But the partnerships appeared to hold limited potential to build a deep services ecosystem."

Still, the South Korean tech giant is a powerful draw. "Samsung — like Apple and Huawei — has its own center of gravity," said Techsponential's Greengart, adding that it's capable of commanding attention through its events and products. That makes it an appealing partner for other big industry names and gives the company some assurance that it won't succumb to the same fate that other pure hardware vendors, such as HTC Corp.'s smartphone business, have fallen prey to in the past.



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