Samsung VS Huawei | Compare in 2019


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Samsung VS Huawei

In quality but there are zero doubts that hallway wins this one compared to the s10 plus and it’s standard is This video was sponsored by Brilliant. Samsung’s latest earnings are out, and once again,

Samsung VS Huawei

Samsung VS Huawei Compare

The company’s phone earnings are on a decline, while competitors like Huawei seem to be unstoppable in

their growth. This sounds a little worrying for Samsung, but in the 38th episode of The Story Behind

series, I’d like to argue that Samsung is actually letting its phone business slip intentionally. And so are

other, similar companies like Sony as well. Let me explain. I know, it might sound strange to say that the

king of Android would be pivoting their attention away from smartphones, but I think there are some

pretty clear signs if you know where to look. So let’s start with this one. It’s a statement Samsung has

released just a couple of days ago, saying that they will invest 160 billion US dollars into R&D in the next

3 years. Which, uh, first of all, just wow? That’s a lot of money. But focus on the areas they increase

investments into New ones are AI, 5G, automotive electronics parts, and biopharmaceuticals, and from

their existing business units, they highlight semiconductors and displays. You know what’s not in this

Samsung VS Huawei

Samsung VS Huawei
Samsung VS Huawei

Samsung VS Huawei

press release? Phones. Not a single mention of phones anywhere in their strategic investment statement.

And I mean, just look at their latest flagships. They are great phones, arguably some of the best on the

market, but Samsung has undoubtedly slowed down the pace of innovation here. They all

look kind of the same, their most impressive features, like the incredible AMOLE screens with curved

edges, the pen, and the premium build quality … well yes, they are better than ever, but they also have

been around for a year now, haven’t they? Samsung has even started reusing key components like

image sensors across multiple flagships lately. All signs that they are kind of dialing down their efforts

for aggressive phone hardware innovation that we are used to from them. And all of that while the

competition has really stepped their game up. Triple cameras by Huawei.In-screen fingerprint readers by

Vivo. Motorized cameras and bezel-less screens by OPPO and Vivo, super-fast charging called Super

Samsung VS Huawei

  • Samsung
  • Huawei

Samsung VS Huawei

VOOC by OPPO and the list just goes on. These are all things that, a few years ago, we would have

expected Samsung to pioneer. But instead, they let the competition run with it. Now, I ran some polls on

my Twitter account, because you know, I thought maybe I’m subconsciously biased, or maybe it’s all just

in my head, but you people seem to agree as well. Only 11% of you said the Note 9 was straight-up

innovative, while 27% of you said the same thing about the Huawei P20 Pro. Now, remember, more

innovative does not equal better, but it seems like Samsung just isn’t trying as hard as Huawei and the

others. Which shows in sales figures too. Galaxy phone sales decreased year over year by 8.3 million

units last quarter and Samsung’s market share slipped by 2% as well, while Huawei was growing and

now claims to plan to take over Samsung by the end of 2019. That’s not some distant future, that’s next

year. Which all begs one question: why are Samsung de-emphasizing phones? And I think the answer is

Samsung VS Huawei

Actually quite simple. Making smartphones is becoming less and less profitable over time, whereas

making other stuff, like semiconductors, memory modules, displays and so on, is becoming more and

more profitable. So Samsung is simply shifting their attention from one to the other. The most obvious

bad sign for phones is that that Smartphone sales globally have started shrinking. And they have

continued to shrink for 3 quarters in a row, showing that developed markets like North America and

Europe are completely saturated and even China saw declines, although they have had 4 consecutive

quarters of decline now. The only markets with real growth are developing ones like India, where

everyone is super price-sensitive and profits are basically non-existent. Phones are kind of becoming like

PCs.Sure, they are super important and we still use them all the time, but we don’t really need to buy a

new device every year or two anymore. And not only is the market size shrinking but making a profit is also

Samsung VS Huawei

Becoming more and more difficult. In any industry, only defensible and unique products can have high

profits. After all, if you produce the exact same things your competitor, you can’t charge much higher

prices than them. Consumers just won’t pay for it. In the Android world, there are 3 ways to become

unique: you can have hardware that others can’t really copy easily, such as AMOLE screens, triple

cameras and so on, you can have software customizations that do something meaningfully better than

the competition, or you can have a brand that people love and will pay extra for. But increasingly, all

three of these are becoming basically impossible. There have been very few truly useful hardware

innovations in the last few years unless you think this is particularly useful. And the same goes for

software. Stock Android is kind of just good enough these days. And branding, well, that used to be the

one thing Samsung did much better than its Android competitors combined, but here too, Chinese

Samsung VS Huawei

brands like OPPO and Huawei have actually caught up. Their ads and launch events are just as premium

and desirable as those of Samsung. In other words, both the real and perceived differences in quality are

shrinking and yet Samsung’s phones cost more than those of Huawei and Xiaomi, who subsidize them

with profits from networking equipment in the case of Huawei, and internet services in the case of

Xiaomi. If you’re wondering, I made videos that explain both of these companies and their business

models in-depth, so you can go and watch them right here. Anyway, Samsung might eventually find a

way to show meaningful differentiation, like maybe the long-rumored foldable Galaxy X, but until that

happens, they are just stuck with regular phones, where their only options are to either keep prices high

and lose market share to their Chinese competitors, or lower prices. Either way, phones become less

profitable. Now, you’d think that a change like that would have a huge impact on Samsung, but so far it

hasn’t. These are their profits overall, they are growing, they are very healthy, and they have more than

doubled their stock price over the last 5 years. This means that Samsung must have found a way to

make more money somewhere else. Which they have. This chart from Counterpoint Research, which by

Samsung VS Huawei

  • Samsung
  • Huawei

The way, I dearly love, compares Samsung’s overall profits from their mobile business with that of their

semiconductor business. Semiconductors are only one of their many new focus areas, but let’s just focus

on this one in my video. Cause look at these profits. Samsung would be stupid to focus on smartphones

because they have a real moat here. Now,  of their competition in both capacity and technological

know-how especially when it comes to memory chips, they have overtaken Intel to become the world’s

largest chipmaker, and they are working on soon overtaking Sony to become the largest maker of image

sensors too. Big, big, big moats. And you know, defensible = profitable. Hence this chart. But even moats

don’t last forever, and the Chinese government has this plan called “Made in China 2025″, where,

among other things, they want to create a whole semiconductor industry that is based in China. The

plan is that the government: A, invests a lot of money into these industries, to kick start them, and then B,

simply tells foreign companies that if they want to sell their stuff in China, they have to move some of

their manufacturing over to China, they have to open a local joint venture with a local partner, and they

have to transfer some of their key technologies over to the local partner. It’s the same thing that they’ve

done in many other industries as well. If this works, then in just a couple of years, the market will be

flooded with Chinese companies creating cheap semiconductors based on foreign IP. So now. By the

way, an interesting parallel to Samsung would be Sony, whose Smartphone business has-been in a free

fall for years now. They are planning to sell just 9 million phones this year and they are losing money on

them, so the business has pretty much become irrelevant by now. And yet, their shares have more than

Samsung VS Huawei

  • Samsung
  • Huawei

Tripled in the last 5 years. And their story is pretty similar too. They pivoted away from phones and

previously PCs to focus on more profitable businesses. Mainly the PlayStation, where they have created

a very profitable ecosystem of both hardware and the software, and … wait for it … semiconductors, like

business units from the last quarter and here are their operating incomes. It’s not even comparable. Cause

these two are defensible, unique businesses and making commodity Android smartphones just isn’t. In a

sense, both of these companies are simply moving up the value chain and creating more and more

technologically complex products like semiconductors, while the Chinese competitors are napping at their

heels from the bottom, and taking away businesses units from them that have lower margins, such as

commodity Android phones. Complex, technical know-how is what gives these companies their real

competitive advantage. If you’d like to move up the value chain yourself by mastering difficult areas

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Samsung VS Huawei


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