Lately, Samsung has been hammering Apple with ads that promote its Android-based Galaxy SIII smartphone while making fun of the hype surrounding—and fanboy devotion to—the iPhone 5. When I tell Michael Abary, SVP of product marketing at Samsung, that the commercials eventually convinced one of my close friends to buy the new Galaxy, he seems giddy as a school boy. "Oh, it's working!" he beams.
Abary didn't need the anecdotal evidence to know it. Not only has Samsung become the No. 1 handset maker—trouncing Apple and LG in market share—but this month its Galaxy SIII became the world's best-selling smartphone in the world, ahead of the iPhone 4S.
Despite its success in the smartphone market, Samsung has lagged behind in the PC and tablet market. Its PC sales are nowhere close to global market leaders HP, Lenovo, Dell, and Acer, while the company's 18.4% tablet share is dwarfed by Apple's whopping 50.4% hold. However, the launch of Microsoft's new operating system, Windows 8, last month could change its fortunes, giving the South Korean manufacturer new hope in the increasingly converging PC and mobile markets. But it also draws attention to the company's utter dependence on third parties like Microsoft and Google for software—a dependence that is more and more looking like a disadvantage.
Traditionally, hardware makers (or OEMs) like Samsung and HP have relied on Microsoft for its Windows operating system. Windows enabled these OEMs to sell low-cost hardware at high volumes, and allowed them to gain significant market share in the PC industry. But in the last decade, Apple, which controls both its software and hardware, has shown the benefits of its unique approach by launching whole new verticals—from the iPod to the iPhone to the iPad—before its competitors could even imagine developing compelling alternatives to Cupertino's music players, smartphones, and tablets. These hardware makers had to wait for Microsoft and Google—makers of Windows 8 and Android, respectively—before they could start developing competing devices.
To some, the fact that Apple now sells more iPads than hardware makers sell PCs signals that there are significant downsides to the traditional partnership model between hardware and software makers. But according to David Song, who manages Samsung's global PC division, there wasn't really an alternative. "Under the circumstances, there is some dependency on the operating systems," Song acknowledges. "But at the moment, nobody can just escape that dependency in the PC industry. We want to make our collaboration better—to work closer with our partners."
"With Google and Microsoft—in this case Windows 8—it's a symbiotic relationship," Abary adds. "We need them as much as they need us. We would not be able to be where we're at today in the smartphone market, for example, without Google."
When I ask whether Apple's vertical approach gives the company a leg up, Song says Samsung will be able to add value over its competitors by improving the experience—via the company's Stylus S Pen functionality, gesture technology, and novel form factors. "Frankly speaking, compared to Apple, there are some limitations in terms of operating systems," Song says. "But again under the circumstances, we will be ahead of the other [hardware] vendors."
Song says the Windows 8 ecosystem will give Samsung an advantage in the industry. Part of the reason for Apple's success has been its ability to create an ecosystem of hardware and software—that is, Apple's user experience improves if engagement occurs across an iPhone, iPad, and Mac. The devices work well together across a variety of services, from iTunes to iCloud to iMessage and more. While Android has afforded a cross-platform experience on smartphones and tablets, Windows 8 will finally enable hardware makers to create some fluency across desktops, laptops, tablets, and smartphones. Toward that end, Samsung launched its ATIV line of devices, which include a Windows Phone 8 smartphone, as well as Windows 8-based PCs and tablets. "Without Windows 8, it was very hard to make such kinds of [devices]," Song says.
Still, the fact remains that OEMs like Samsung have had to wait for Microsoft to develop a mobile-friendly version of Windows to compete in the market. And in that time, Apple has managed to sell more than 100 million iPads. Does this mark an inflection point for Samsung?
"I don't think we've necessarily had to wait," Abary says. "And in regard to whether this is an inflection point—and where maybe some of our competition is—I think that the entire industry is moving at such a fast pace, that we're not necessarily sure where this marketing is going. But Samsung intends to be a driver of its own destiny and fate. Do we know the answer of where the market is going? Of where technology is going? Of what kind of devices will be invented? I'm not sure that anybody knows honestly."
Abary adds, "But we intend to be a leader in the directions that the market goes."
[Image: Flickr user Tasayu Tasnaphun]