Has Samsung lost its plot in Indian Smart Phone Industry?

Hi Guys,

When I saw the ratings for Samsung Galaxy S5 in Flipkart, I was quite shocked. I expected a poor show, but I didn’t expect 1.6 out of 5 for the new phone. It made me think as to whether Samsung has lost its plot in India somewhere down the line?

To understand this sudden dip, it is essential for us to understand the evolution of Touch Screen Phones or the Smart Phones (both terms might be mutually exclusive, but most Touch Screen Phones are smart phones and vice versa) in India.

Nokia 7710 was first touch screen phone in India (year 2004). But, it was in the late 2000s that Touch Screen phones got a bit popular in India. When Nokia introduced a stream of Touch Screen phones in late 2000s and early 2010s, there were few takers. But, they were not much impressed with the interface. Sony had a few good phones and then there were niche players like iPhones for which Apple didn’t have any proper retail strategy in India. It was around this point of time, Google’s Android phones were becoming popular.

It is at this stage that we need to understand how the commonly used jargon in Strategy class ‘Diversification vs Focus’ worked here. Diversification is a strategy where a firm is present across different sectors instead of focusing on a single business (eg: Tata Group). Focus is a strategy where a firm concentrates on a single business and focuses all its efforts on the single business unit (eg: Ferrari in Sports cars).

In the early 2010s, the touch screen market entered the growth phase. Diversification strategy works in Growth phase. Samsung introduced a few Android mobiles in India and they were becoming a huge success. Buoyed by the success, Samsung started introducing a wide range of phones available across all price categories from Rs. 7000 to Rs. 40000. At this point of time, other players were very focused like Apple or HTC. Samsung had phones to offer to all type of customers. The Diversification worked for Samsung. Customers thought Samsung Phones had value for the price they paid for. These phones became an aspirational product for many of the youngsters. Samsung rode on the absence of competitors.

The next phase is an interesting one. Around 2012-2013, Samsung introduced Samsung S3, which was a total revamp of S2 and provided a wide range of features. They also had large screen phones at the middle segment like Grand which was also a success. On the other side, they were losing the market at the lower end of the market. Micromax had slowly started to dominate. They offered phones with same features at around 50% of the price Samsung provided. Samsung’s ‘Cost Leadership’ strategy started to vanish. At the other end of the spectrum, Apple started to focus in India and iPhone4 and 4S were major successes in India. Nokia’s Lumia Series with Windows 8 OS had quite a few takers who wanted alternatives.

Enter the next phase in late 2013 and early 2014. I feel this phase is the beginning of Maturity phase in the Smart phone market with less and less innovations coming and cost becoming an important factor. Micromax rode on the ‘Cost Leadership’ strategy and made Hugh Jackman their brand ambassador. They introduced 5 inch screen phones for Rs. 10000 odd and their Canvas series was a huge hit. The same features in a pure branded phone would cost double.

Nokia’s Lumia had its set of loyal customers. Apple had started to increase its value share. Google’s Nexus 4 and 5 were real alternatives to people who were looking for premium segment phones.  Moto G opened to a stunning response with all phones sold out in Flipkart in no point of time. Samsung had no significant launches in the mean time. I have a feeling that Samsung started to think that they belong to the ‘Premium segment’. Launching Galaxy S5 at Rs. 51000 (around the price of an iPhone) just proves what Samsung thought about the phone. If you compare S5 with Galaxy S4 at around Rs. 35000 or Nexus 5 at around Rs. 30000, you will know how overpriced S5 is.

At this point of time, Samsung still is the leader in Indian Smart phone industry by a huge distance. But, if you think as to how Nokia lost its plot a few years back, you would wonder if Samsung could lose it the same way.

Other point to ponder is how Samsung is going to respond to the competitor’s strategy. At one point of time, Samsung were the ‘Cost Leaders’. Now Micromax has taken the tag away from them. It would be difficult for Samsung to occupy the same rung as Micromax. Competitors like Nokia, Apple have entered into ‘Differentiation’ strategy with unique products.

The question that comes to one mind is whether the time has come for Samsung to shed its Diversification strategy and start focusing on a particular segment? Also, do they have the time to do the same?

It would be interesting to observe how the smart phone industry would pan out in the next months (Years is too long for the industry).

Happy Reading!

The flaws in our Security System!

Hi Guys,

A few days back as I was at Chennai Egmore to board a train home. There were a flock of people entering the station and the Railway security personnel stopped us and asked everyone to open the baggage. As there was no scanning device, they had to search manually. When I enquired, they said it was as per the order to the Election Commission. It took some two extra minutes for me to get in.

Most people didn’t expect it to happen, but none were at discomfort too. It was a smooth check. Simultaneously, my thought process took me to another world. What if a person wanted to take excess money in his baggage at this point of time? Is there any possibility? I figured out there are lot of easy ways. He could just walk in through the other entrance. He could come through an electric train. He could board the train at another station. There are no security checks anywhere. These are not tough to think and it came to my mind in a matter of two minutes.

Another serious doubt that came to my mind was how come the security personnel never thought about these steps. Apparently anyone who would like to smuggle would not come straight through the front gate unless he is an idiot. Are the checks done in order to stop smuggling or is it done for just a show off?

This doubt has been in me for a long time. A few days back when I went to C.M.B.T (Chennai Mofussil Bus Terminal) in Koyambedu during a festive time, strict checking was going on at the entrance. But, I came through a bus and it just went inside. So, there was an easy way in. Two years back when I went to Madurai Railway station to send off my brother before Diwali, strict checking was done in the main entrance. After sending off, I came via overhead platform directly outside and there was no checking (the same platform could be used to enter the station as well).

All these incidents create a sense of panic in me as to how prepared we are? Whenever you see news that strict checking are done in Public places to avoid any untoward incidents, you feel safe. But, when you see the quality of checking, a sense of fear creeps in. And most of the checking is done during festive season expecting an untoward incident. But, if you see the pattern in the past, untoward incidents happen on the most unexpected days.

When I think so much about the quality of security, God has been kind with us that not many major incidents have happened. I hope that the Government realizes that namesake security is as good as no security and the efforts are ramped up.

Happy Reading!

Redefining Cricket Telecast using Analytics!

Hi Guys,

It has been a long time since my last post.  This time writing it from the comfort of my home and typing in a traditional Desktop Key Board after a long time.

If you have been following World Cup T20 in Star Sports, you would have noted that Star Sports is providing viewers with lot more details than usual. You get a huge analysis of data about the pattern of a batsman’s scoring rate in particular overs and against a particular bowler of a category of bowlers. You get the same type of details for a bowler and also for a team. You are also provided with the line and length at which a batsmen hits or bowlers takes wickets.

This is completely an innovative move on the side of Star Sports to provide viewers with the analytics that only teams had. Another important thing out of the whole analysis is that Star Sports is providing meaningful pattern out of the data available.

In today’s world, you have a whole bunch of data. More often than not, analysts tend to slice and dice the data without finding any proper meaning in the data. As long as you do not get meaningful patterns out of the data, there is no use of Analytics.

From what Star Sports has done, you get meaningful pattern out of the existing data. You tend to know how good a batsman is in the initial 10 deliveries, how effective he is against seamers, which is his favorite area. So far, a few teams might have analyzed to this extent. But, now this opens the door for everyone and strategies can be easily designed based on the analysis. This removes decision making based on gut feelings.

The disadvantage though is that the analysis is based on matches played after either 2010 or 2012 which means the sample size (or population) is too low and you cannot come to a conclusion based on this data. There are many other factors like the pitches played in, the quality of bowlers or batsmen and external conditions.

Despite the disadvantages, this is a great move from Star Sports to provide a far more reliable prediction than the earlier versions of plain analyses.

Happy Reading!