Inside Samsung’s exploding batteries

It’s not easy to design a safe and affordable portable device as Samsung found with the exploding Note7

One of the most humiliating corporate crises of recent history has to be last year’s recall of the Galaxy Note.

Airlines around the world started telling passengers that the devices were banned during their pre flight briefings, causing untold damage for the Samsung brand.

Now Samsung have completed a review into what happened including an infographic illustrating the exact problem with the batteries.

That review shows the design and manufacturing errors that resulted in the batteries bursting into flames. How Samsung are fixing it or putting in systems to prevent that happening again isn’t discussed.

What the infographic does show is how complex the design, engineering and manufacturing is in modern technology – something that is often overlooked by many technologists.

Battery technologies are particularly fraught as a lot of energy is compressed into a small space and the chemistry of Lithium Ion batteries makes them particularly dangerous should they be damaged or incorrectly used, as Boeing found with the early models of the 787 Dreamliner.

Modern life and the devices that we take for granted are complex and that complexity though can easily come back to bite us. As Samsungs’ exploding batteries show, sometimes that complexity is difficult to manage.

 

Smartphones become a mature market

The smartphone market has matured, which brings a range of challenges for manufacturers.

As Apple celebrates shipping a billion iPhones, the smartphone industry has entered maturity reports IDC.

The analyst firm’s latest survey of the global smartphone industry reports only 0.3% growth over the equivalent period of last year.

While both Apple and Samsung have had successes over the past year with new models, IDC believes growth now lies in shifting ‘flagship products’ at lower price points with enhanced features.

A more mature industry opens opportunities for the cheaper Chinese brands and IDC is finding those companies are unsurprisingly proving successful in emerging markets. For the established brands redefining their price points and models is going to be the challenge.

That mature marketplace is going to focus the minds of product managers, marketers and executives at all the manufacturers as capturing profit and investors’ imaginations in a mature market is very different to that when selling a new, high growth product.

Samsung pins its hopes on the Internet of Things

Samsung’s launch of a Smart Things home hub is a step forward for the company looking to pivot from the smartphone market

South Korean industrial giant Samsung is struggling, in the last year its smartphone division reported a 75% drop in revenues while their handsets, while still the world’s most popular, lost ten percentage points of market share.

The company’s smartphone division is stuck because mobile carriers in the western world are abandoning subsidies for handsets, with most developed markets now at saturation point for cellphone adoption there’s little point in chasing market growth for all but the most desperate telco.

For Samsung that’s been a problem as their premium model strategy has been based upon western consumers ordering a new phone every 18 to 24 months as their mobile contracts were renewed, now those deals are not so common a key sales channel for the Korean conglomerate has been lost.

This leaves Samsung looking for the next market and at this week’s IFA consumer technology event in Berlin, the company unveiled its Smart Things hub, a cylindrical device that connects with your TV, air conditioning, music system, and other home appliances.

Smart Things was an acquisition Samsung made last year to improve its IoT product line and the company has an open platform for connecting household devices with over 200 already certified.

For Samsung with its range of domestic equipment this may well mark the future for the business. The interesting thing though is the smartphone is still integral in today’s vision of the connected home, so we won’t see Samsung leaving the handset market soon.

Apple continue to win the smartphone wars

It remains to be seen if Apple win the watch market however they safely have the smartphone business firmly under control says Kantar Worldpanel ComTech

As the annual Mobile World Congress begins to wind down in Barcelona, Kantar Worldpanel decides to stir things up with its quarterly report on the market share of mobile phones.

The news is mixed; Apple continues its rampage in the Chinese market with a quarter of phones sold in the PRC being iPhones while Android slips in Europe but picks up market share in the US.

At the top end of the market it’s clear Apple is beating Samsung and the other manufacturers are deciding to avoid entering the battle of the market at all, instead focusing on lower and midrange devices.

Competing at the price points which don’t interest Apple may not be easy though suggests Carolina Milanesi, ComTech’s Chief of Research & Head of US Business; “while mid-tier consumers might be more accessible than high-end ones, manufacturers will have to work harder than ever to stand out in an increasingly crowded marketplace.”

Diversifying away from a tough smartphone market is one reason for the focus on watches at Mobile World Congress although even in that market Apple is about to launch a blitz around its upcoming product.

It remains to be seen if Apple win the watch market for the moment though they safely have the smartphone business firmly under control.

Samsung needs a win with the Galaxy 6 smartphone

Samsung are staking a lot on their new Galaxy 6 smartphone

Having seen its dominance of the smartphone market eroded by a resurgent Apple and a range of upstart Chinese vendors, Samsung has announced it will launch its Galaxy 6 smartphone on March 1 reports the Sammobile website.

The new phone is reported to boast a curved screen measuring somewhere between 5.1 and 5.3-inches a fingerprint sensor and a 20 mega-pixel camera, which compares well to the iPhone 6’s eight mega-pixel camera.

While the proposed specs are impressive, the company has a challenge ahead as consulting firm IDC reported its smartphone shipments dropped 11% year on year last quarter in an market that grew by quarter.

Top Five Smartphone Vendors, Shipments, Market Share and Year-Over-Year Growth, Q4 2014 Preliminary Data (Units in Millions)  source IDC Research

Vendor

4Q14 Shipment Volumes

4Q14 Market Share

4Q13 Shipment Volumes

4Q13 Market Share

Year-Over-Year Change

1. Samsung

75.1

20.01%

84.4

28.83%

-11.0%

2. Apple

74.5

19.85%

51.0

17.43%

46.0%

3. *Lenovo

24.7

6.59%

13.9

4.75%

77.9%

4. Huawei

23.5

6.25%

16.6

5.66%

41.7%

5. Xiaomi

16.6

4.42%

5.9

2.03%

178.6%

Others

160.9

42.9%

120.9

41.31%

33.1%

Total

375.2

100.0%

292.7

100.0%

28.2%

*Lenovo + Motorola

24.7

6.6%

19.5

6.7%

26.4%

While the numbers for the Chinese manufacturers are impressive, Apple’s shipments should also worry Samsung given the two companies are fighting for the top end consumers in the European and North America markets.

For Samsung  its smartphones form a central part of its Internet of Things strategy so the success of the Galaxy 6 is critical to the company’s future plans, particularly given the lukewarm reception to the Tizen based Z1 phone on the Indian market last month.

Samsung’s China Crisis

With Samsung struggling with both its high end Android smartphones and its lower priced Tizen devices as Chinese manufacturers like Lenovo, Xiaomi and Huawei steal market share, the company  desperately needs to hit the mark with the Galaxy 6.

Google as well has a stake in Samsung’s success as the Chinese manufacturers are increasingly turning to open source versions of Android for their smartphone systems. A flagship device for Android to counter the iPhone 6 is desperately needed to keep consumer and developer interest in the Google Play store and for Google’s consumer IoT ambitions.

The stakes are high for both Google and Samsung, the South Korean giant getting a mis-step with the Galaxy 6 could see it following the faded fortunes of its Japanese competitors.

Google moves deeper into the smarthome

Google Nest’s acquisition of Revolv is about further locking in the smarthome market

Since Google bought smart smoke detector company Nest earlier this year it’s become apparent that the search engine giant sees the smarthome as one of its big marketplaces in the near future.

Nest’s acquisition of smarthome automation company Revolv yesterday illustrates this and shows that Nest is Google’s smarthome division.

As the smarthome becomes more common, the value of controlling the systems that run the connected home’s devices becomes greater. So the positions being taken by Apple, Google and Samsung are going to be important as the marketplace develops.

The latter relationship — Google and Samsung — is particularly fascinating as Samsung’s smartphones and tablets are locked into the Google Android system which makes it harder for the Korean industrial giant to strike off in an independent path.

All of this of course is based upon homeowners being happy with having their smarthomes locked into one vendor’s platform. We may yet see the market rebel against the internet giant’s ambitions to carve up the connected world.

Attacking Apple iPhone 6

Attacking Apple is not the way to beat them in the marketplace

One of the saddest things in life is the company that bleats ‘but we thought of it first’ when overtaken by a smarter or more credible competitor.

Since the release of the iPhone 6, the knives are out for Apple with Samsung, HTC and even Sony poking fun at the new product pointing out the features already in their products.

The problem for Apple’s competitors is the market isn’t listening to the attack ads. In China alone a million iPhones were sold in first hour they went on sale.

For companies competing with Apple they have to find a compelling product, not be sniping at the market leader. For Samsung in particular with its falling revenues it needs to be generating some excitement in the market, not depressing its customers.

Here’s the Samsung ad; while it’s pointing in the wrong direction it’s good in that it holds the critics to account but it makes not a spit of different to the marketplace.

Disrupting the smartphone market

The Tizen and Firefox smartphone systems threaten to disrupt the entire industry and ruin the plans of both Apple and Google.

It’s been a long time since we’ve had a three or four way war in the technology industry, with most sectors settling down into a two way fight between alternatives.

Mozilla’s promised $25 smartphone project threatens to open the mobile industry into a three way battle just as it appeared the market had comfortably settled down into an Android and iOS duopoly.

Now we see a three way race and possibly four if Samsung can get traction with its Tizen operating system that it’s bundling into the latest version of the Gear smartwatch.

One positive aspect of the four way battle is that three of the participants – Firefox, Tizen and Android are relatively open so compatibility between them isn’t impossible.

For Google and Apple though, this four way tussle presents a problem to their business plans.

Apple’s iOS ambitions of putting the software in smarthomes, connected cars and, possibly most lucratively of all, into retailing with iBeacon are threatened by a fragmented market and a rapidly eroding market share.

For Google, both Firefox and Tizen threaten the dominant position of their Android operating system that forms a plank in the company’s ambition to control the planet’s data and become an ‘identity service’.

Worse still for Google’s information ambitions, Firefox is working with Deutsche Telekom on a security initiative that will lock away users’ data.

So the stakes are high in the smartphone operating systems wars.

It’s early days to forecast the demise of either Android or Apple iOS, which is unlikely in the short term, but if Firefox’s operating system does take hold it will mean the smartphone industry is about to become a lot more complex.

Samsung’s place in the market

How will Samsung respond to the challenges from Apple and Google?

Samsung’s announcement of a 7 billion dollar quarterly profit yesterday tops off a big 2012 for the Korean electronic manufacturer in which they became the world’s biggest mobile phone manufacturer after overtaking Nokia’s sales.

Android phones have been the great success for Samsung as other providers, including Google, have been comparatively slow to offer devices which give telcos the opportunity to claw back some margins they’ve been giving away to Apple over the last few year.

Despite these successes Samsung have a number of challenges ahead in 2013.

The biggest challenge is channel conflict with Google and Motorola working on launching an X-Phone which they hope will compete against both the iPhone and Samsung products

Channel conflict was always going to be a problem for handset manufacturers using the Android operating system when Google bought Motorola Mobility and now we’re seeing the effects of this.

The Koreans aren’t taking Google’s threat lying down having joined with Japanese manufacturers in a joint venture to develop a Linux based operating system for smartphones and Samsung expects to release Tizen equipped phones later in 2013.

Just on its own, the conflict with Google would be a problem for Samsung but the ongoing fights with Apple over tablet and smartphone patents continues to be a management distraction as well.

Apple’s relationship with the Korean conglomerate is a classic case of co-dependency as Samsung supply the bulk of the processors used in the iPad and iPhone. While Apple may want to kill the Samsung Galaxy tablet range, they have to be careful about going too far with a key supplier.

On the Asymco blog wonders if Apple’s announcement to bring some manufacturing back to the US may be part of a strategy to deal with the company’s dependence upon Samsung.

With threats from ‘frenemies’ like Apple and Google one of best defenses Samsung has is the companies varied range of products along with its willingness to strike out on its own into customers’ markets.

At the Computer Electronics Show in Las Vegas, Samsung showed off its range of OLED TVs, laptops and other equipment alongside smartphones. That breadth of product frees the company from being locked into one or two markets.

Of course the best example of such an electronics conglomerate in the past was Japan’s Sony which is now truly lost and wandering in the business wilderness.

Whether Samsung can avoid Sony’s mistakes will be worth watching over the next few years, for Apple and Google it may determine who is the biggest competitor in the 2020s.

Freebies and rorts

Should writers, bloggers and journalists be accepting free travel and accommodation.

Something went badly wrong in Samsung’s PR department last month as their strategy of engaging bloggers turned into a series of embarrassing arguments over control.

First, a pair of Indian bloggers found themselves stranded at Berlin’s IFA 2012 fair after arguing with Samsung then French blogger France Quiqueré told of her similar encounter with Samsung’s control freakery at the London Olympics.

Both encounters raise the issue of what is expected when a journalist or blogger is given a free trip to a conference or event.

Freebies are always a difficult issue, the blogger or journalist is always going to be in a conflicted position and the organisation paying the bills has an interest in what they report.

In an ideal world, we’d all follow Sarah Lacy’s example where no-one accepts freebies. The problem with that is that most media companies, let alone bloggers, don’t have the funds to attend high priced conferences in their own cities and going to one half way across the world is out of the question if someone else doesn’t pay.

Sarah’s journalist model works fine when you have a well funded operation like Pando Daily’s VC investors or someone prepared to work for nothing – the digital sharecropper model.

With the collapse of newspaper revenues, most media companies long ago gave up their ethical objections to accepting paid trips to conferences – in sections like travel, tech and motoring the freebie has been well established for decades.

Basically, if event organisers didn’t pay the bills for journalists and bloggers their conferences or product launches won’t get much media attention because most of the reporters simply couldn’t afford to attend.

This is simple economics and where disclosure comes in. If a blogger or reporter has been given free travel or accommodation so they could attend an event then readers should be told.

What really matters in all of this are the audience and the reporter’s ethical compass. If the readers or viewers can trust and value what reporters produce and in turn the reporters are comfortable within their own moral boundaries then everyone is a winner.

The danger is getting the balance wrong. If readers lose trust, PR people start taking liberties (as Samsung tried to do) or bloggers and journalists are uncomfortable with what they do then it’s time to stop doing it.

One quick way to destroy credibility is for PR managers to expect those blogger to act like performing monkeys in return for ‘winning’ a competition or believing that ferrying a journalist to an event will guarantee fawning coverage.

Any decent journalist or blogger who respects themselves and their audiences won’t do that, if only because it will damage their brand or career prospects. This is the lesson Samsung have learned.

For the record, I do accept freebies and disclose them at the bottom of any related blog posts. If an investor would like to bankroll a down under Pando Daily, you know where to contact me.

The reverse ambush

Ambush marketing isn’t always a good idea

As the Apple faithful starting queuing outside stores to buy the latest version of the iPhone, in Sydney electronics manufacturer Samsung set up an outlet a few doors up the street and offering $2 Samsung Galaxy phones.

Some in the press portrayed this as “ambush marketing” by Samsung, claiming that the Korean company has stolen coverage from Apple.

In reality, all the stunt has done is emphasise the different market positions of the companies; Samsung have people camping out for $2 phones while a few doors up the street there’s a bigger line for an $800 Apple product.

The message is clear; Apple’s products are more desirable than Samsung’s at even 400 times the price.

Whatever Steve Jobs was reincarnated as – a Bogong Moth or the next Dalai Lama – he’s laughing right now.