To shut out closing week’s buying and selling week, Samsung shares tanked, and everyone seemed to be talking about it. The short version: Samsung stock dropped 6 percent, which means $ 12 billion of market value was wiped out in a single day. In case you were wondering, Samsung has a market value just under $ 200 billion. By comparison, Apple is worth $ 410 billion, Google is worth $ 290 billion and Microsoft is almost $ 300 million. All of these market values make BlackBerry seem like a drop in the bucket given its market capitalization of $ 7 billion.
Why did Samsung drop? A few analysts downgraded the stock. The downgrades apparently were sparked by fears that Samsung is going after more market volume at lower margins. The evidence? A couple of stripped down models of the Galaxy S4 were announced.
I think Samsung is doing a tremendous job of profiting from the global Android explosion. As much as people think Google must be unhappy with Samsung’s dominance, I don’t think that’s the case. Google must love how quickly Samsung has helped to propel Android to dominance. We are in a new world of mobile computing, and Android has become the mobile equivalent of Microsoft Windows in terms of market dominance. To be clear, I’m not comparing the way Microsoft is run versus Google, or the quality of each company’s software. I’m speaking only about dominant market share.
Google wants its OS in as many people’s hands as possible because it inevitably generates revenue (advertising, app sales commissions, media sales, etc). Gartner data from Q1 2013 shows that Google has succeeded, with almost 75 percent market share of the smartphone market. It’s also widely known that Samsung is the only player making any real money among Android vendors with their dominant share.
I remember looking at the PC market a few years ago. HP and Dell were the two major vendors and the market leader controlled about 20 percent of the unit volume. Of course in PC land people really didn’t care too much about the look and feel of the hardware. The tower went under a desk, and the keyboards and monitors were all pretty much the same.
Compare this to the smartphone market, where Google (via Android) is the new Microsoft. People care about the look and feel of the hardware because they interact with the whole package. They hold the whole product in their hand. I think this provides mobile device vendors with a chance to build a more powerful brand, as Samsung has done. We also have to realize that each vendor tweaks Android to their liking, so there is some additional brand building capability in Android land versus the old world of PC land.
According to research from former Morgan Stanley analyst Mary Meeker, who’s now a companion at VC agency KPCB, Samsung has long past from four p.c smartphone share in 2010 to having 29 % share in 2012. What a transfer!
Samsung is now able that no PC maker has ever been in. It is grown to revel in boatloads extra market share than every other competitor. Samsung controls a lot of its personal provide chain, and it has very good model worth amongst Android customers.
Are you able to blame Samsung for going after the mid vary and low finish of the market? I will be able to’t. I feel it can be making the fitting selections. No person else stands a possibility of incomes a cheap gross margin when competing in opposition to the quantity that Samsung brings to the desk. If Samsung performs its playing cards proper (and I believe it’s doing so), it is going to personal cellular phone market simply as Nokia owned it within the Nineties. With the exception of that now the OS is beautiful standardized, and Samsung will get to depend on Google’s R&D and products and services free of charge.
The one different “information” that will have affected Samsung inventory was once the potential for an Apple exchange-in application. Does this type of software from Apple damage Samsung? I don’t assume it makes a lot of a distinction to Apple’s opponents. I feel most buyers behave through picking the platform they wish to be on after which selecting a cellphone. Individuals who have joined the Apple camp are possibly to stick to it simply as individuals who put money into Android via a Samsung Galaxy S4 or no matter different software they select.
The introduction of a alternate-in software with the aid of Apple, whether it is actual, most probably simply improves the speed at which Apple consumers will improve. It’s a great way to get consumers to spend extra money than they in any other case would possibly. Positive, it’ll preserve some would-be Apple defectors faraway from Samsung. However I doubt this is a major factor.
I inspire you all to understand that expertise shares are risky. The market chief regularly attracts a top class valuation. Because of this, when there may be any feel of doable threat, market values tumble. Occasionally the tumble is a precursor to an actual give way. Every now and then it’s simply unwarranted and emotional. Samsung has simplest been using on high for a few years. I believe they’ve bought much more time to experience their spot and construct an impressive moat round their trade.