Samsung Mobile edged by Apple, replaces leadership

Samsung made a change at the top of its mobile segment to take on Apple by differentiating its devices through its software, rather than its hardware.

Samsung Mobile's downward spiral has led to a major change at the top this week, while it continues to be edged out by Apple in businesses.

Dong Jin Koh is taking over as president of Samsung mobile communications after overseeing the work on Samsung KNOX and Samsung Pay, according to Samsung. Jong-Kyun Shin will remain president and co-CEO of Samsung electronics after being at the helm of the mobile business for six years. The change was made during the company's annual management reorganization meeting.

Apple and Samsung's consumer handsets have grown so much in popularity that IT departments have to support and manage both iOS and Android. However, in recent years, Samsung has suffered, as it hasn't differentiated its phones from the competition.

For years, the Samsung Galaxy smartphones had a distinct difference in screen size over Apple's iPhones, but with the release of the large-screen iPhone 6 and 6 Plus in September 2014, the Galaxy is no longer unique.

Both Apple and Samsung have pushed for deeper enterprise adoption and have inked deals with major businesses to attain this goal.

While Apple shook hands with the likes of IBM and Cisco to make iOS, iPhones and iPads more appealing in the mobile enterprise, Samsung has partnered with BlackBerry to make Samsung KNOX more secure with Blackberry encryption integration. The two companies even released a tablet together in March, SecuTABLET, aimed at large enterprise and government customers.

"A lot of workers will bring in their phones. But if you look at Samsung, they've tried to do things to get in deeper in the enterprise with KNOX, and the partnership with BlackBerry," said Jack Gold, founder and principal analyst at J. Gold Associates LLC in Northborough, Mass. "But in the overall scheme, the enterprise is a small percentage of Samsung's market."

Software innovation could give Samsung a jolt

Samsung needs to reinvent its mobile business the same way Microsoft has, and give a reason for not only consumers, but professionals to buy their devices, Gold said.

With Koh's software background, Samsung could revitalize its mobile business by differentiating its software, rather than its hardware, said Jack Narcotta, industry analyst at Technology Business Research Inc., based in Hampton, N.H.

"Overall, I think [the executive move] does highlight how, internally, Samsung is rethinking what it needs to do with its mobile business," Narcotta said.

As recently as 2012, the Galaxy line maker controlled 32.2% of the worldwide smartphone market share, according to IDC. Since then, it has fallen to 23.8%, as the company's last two flagship smartphones -- the Galaxy S5 and Galaxy S6 -- haven't been as well received as previous models.

Samsung's mobile challenges center around marketing an appealing differentiator of their devices, said Patrick Moorhead, president and principal analyst of Moor Insights & Strategy, a tech analyst firm based in Austin, Texas.

They appear to have a different 'answer' every year, which makes them look like they aren't sure of what they want to do.
Patrick Moorheadpresident and principal analyst of Moor Insights & Strategy

"To turn things around, Samsung needs to understand the consumer better, solve problems that they didn't even know they had, and then consistently market it," he said. "It's as simple as that."      

Samsung's mobile business is its largest moneymaking segment, and is behind the company seeing its lowest profits in years. The company's semiconductor segment is its fastest growing business, while it continues to find a way to stop the bleeding in mobile.

"They appear to have a different 'answer' every year, which makes them look like they aren't sure of what they want to do," Moorhead said.

Meanwhile, there has been a revolving door at Samsung's executive office over the past year. At this time last year, the Korean conglomerate fired several high-ranking executives of its mobile division, including senior and executive vice presidents, following disappointing profits from the Galaxy S5, Galaxy Note 4 and Note Edge.

This past March, Samsung Mobile CMO Todd Pendleton -- who was behind many of Samsung's successful "The next big thing is here" ad campaigns against Apple -- left the company, just a month prior to the release of the Galaxy S6.

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