Almost exactly four years ago, Samsung’s marketing boss sat down for an interview and made a claim that seemed almost comical at the time. There was a bit of a language barrier, but the gist of Young-Hee Lee’s bold claim was this: People had been obsessed with Apple’s iPhone line for long enough, and Samsung was going to shift their obsession to Galaxy phones.
If only it were that easy, right? Well, as it turns out, it is that easy when you’ve got a massive smartphone division and tens of billions of dollars to spend on marketing.
At the time of the interview, Samsung had already set in motion a major shift in its advertising strategy that had two goals. The first, believe it or not, boiled down to brand awareness; Samsung was already a consumer electronics giant, but it was hardly the first name that came to mind when Western consumers were shopping for smartphones.
The second goal was to make iPhone users look like idiots. To make them look like mindless hipster sheep who were willing — excited, even — to knowingly use an inferior product simply because everyone else was using it. Samsung’s Galaxy phones, of course, were the better alternative that a smarter breed of consumer would seek out.
Samsung’s new advertising and marketing blitz came at the perfect time. Apple’s iPhone had become such a phenomenon that there was practically no counterculture to speak of, so Samsung would fill a gap and become that counterculture. Nokia was still the world’s top vendor by volume but it had become painfully obvious that the company wasn’t able to change with the industry. BlackBerry, known then as Research In Motion, seemed even less willing to adapt, and it was in the early days of a descent that BGR foretold time and time again.
The iPhone was sleek, elegant and cool. There was simply nothing else like it… but that wouldn’t be the case for very long.
Behind closed doors, Samsung had already begun to rebuild its smartphones from the ground up with one technical goal in mind: copy the iPhone. Fanboy arguments and court battles aside, it’s difficult to argue that wasn’t the case. There are even some internal documents that prove it, like the 132-page report Samsung created to help its engineers copy the iPhone pixel by pixel.
And once Samsung had a line of smartphones that could compete with the iPhone, it was ready to make that impossible promise and begin a meteoric rise that would take it straight to the top of the smartphone market. In 2015, Samsung shipped an estimated 319.7 million handsets, about 88 million more handsets than No. 2 vendor Apple sold during the same period.
Of course, the impact of that massive figure is diminished when you consider how many smartphones Samsung shipped in the prior year: 317.2 million.
Samsung’s smartphone growth has come grinding to a halt. And it’s not because the company’s phones aren’t as good as they once were, or because Samsung’s advertising has slowed down. In both cases, the truth is quite the opposite — the Galaxy S6 and Note 5 are two of the most impressive smartphones that have ever existed, and Samsung’s marketing budget is still 11 digits each year. It’s also certainly not because Samsung is running out of room to grow; an estimated 1.4 billion smartphones shipped in 2015.
The bottom line is this: Samsung’s best smartphones simply aren’t exciting anymore.
How long can you beat the same old drum and expect to find success? A few new features here, a slight redesign there, and a whole bunch of advertising. In 2011, Samsung was advertising something fresh and new. In 2015, Samsung was advertising smartphones that are barely distinguishable from rival devices to most people.
Even when Samsung does try to stray from convention and build something new and exciting, it can’t seem to strike a chord when it goes out on its own. The company’s “edge” devices were somewhat popular in 2015 and they certainly helped Samsung’s margins, but it would be a stretch to say that they generated any real excitement on a wide scale.
Of course, the driving force behind Samsung’s volume growth over the years wasn’t really its high-end smartphones that competed with the iPhone. Instead, Samsung wisely built less capable smartphones that took all of those great iPhone-inspired features and offered them to consumers at a fraction of the price. It was fun while it lasted, but a flurry of companies have popped up in the East that make similar phones and sell them at cheaper prices.
Then, there’s the iPhone.
Apple saw slower iPhone growth in 2015 than in any prior year, and Apple still managed to increase its iPhone sales by 20% over 2014 thanks to new records achieved in each quarter. The recent holiday quarter was the toughest to top, though Apple broadcast that inevitability loud and clear back with the iPhone 6s and iPhone 6s Plus launched.
Despite the slowed growth toward the end of the year, it would be impossible to claim that people weren’t excited for the launch of the iPhone 6s. And with the “S” year behind us, 2016’s iPhone launches will bring redesigned handsets that stir up even more excitement.
Apple’s iPhone are, simply put, the only smartphones that really still excite people on a global scale.
There are definitely other brands that manage to drum up excitement. A good example is Xiaomi, a Chinese smartphone startup that cut its teeth by quite literally copying every move Apple made as closely as it could, to the point where it couldn’t even sell its phones aggressively outside of the Far East since Apple would have sued it into oblivion. But on a global scale right now, there’s Apple and there’s everyone else.
Historically, traffic to BGR’s early coverage of unreleased smartphones has been a fairly good gauge of global consumer interest. We cover early leaks and rumors quite often, and healthy traffic to that coverage has always been a solid indiction of strong sales at launch. It makes sense, and similar parallels have been drawn with Google search traffic.
As always, iPhone 7 rumors have been pulling in a healthy amount of interest. Meanwhile, Galaxy S7 leaks haven’t seemed to attract nearly as much attention as Galaxy S6 leaks did, and that model drew in fewer readers than the Galaxy S5 ahead of its launch.
Samsung is in a position where marketing and dominance in distribution channels are allowing the company’s smartphone business to coast. The South Korean giant’s phones have so much more visibility than rival handsets in so many markets that is now practically guaranteed a level of success. At least, for the time being.
But coasting isn’t growth, and we’ve seen no indication in more than a month of leaks and rumors that the Galaxy S7 will lead to growth. We’ve also seen nothing from Samsung’s low-end and mid-range phones that suggest a return to growth is imminent. Instead, Samsung executives were walking on eggshells as they warned of another difficult year ahead on the company’s recent earnings call.
It’s a tough time to be a leader in the smartphone market if you can’t manage to generate real excitement surrounding your smartphone launches. Meanwhile, we’re likely headed toward yet another round of records when the iPhone 7 and iPhone 7 Plus debut later this year. And at the high end of the smartphone market, you can follow the excitement right to the money.
Dollars and Sense is a recurring column by BGR Executive Editor Zach Epstein. It offers insights on subtle changes in and around consumer electronics with the potential to have a broad impact on companies that drive the industry. Contact the author at z@bgr.com.
