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Samsung in innovation doldrums

World’s largest smartphone maker at a loss for ‘the next big thing’

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Published : 2014-02-09 19:55
Updated : 2014-02-10 13:20

An employee helps a customer inspecting a mobile device at a Samsung Electronics Co. mobile store in Seoul. (Bloomberg)

Despite the enormous amounts of money it spends each year on research and development, Samsung Electronics is at a loss for “the next big thing” to follow up its Galaxy lineup, analysts said.

What’s more, the buzz over Samsung phones has been dying down over the years, and the hype over what its upcoming Galaxy S5 will look like is nothing like the attention the earlier Galaxy S models received.

“Samsung will face headwinds if it fails to show innovation with the Galaxy S5 despite a vast amount of R&D spending in developing the flagship smartphone,” said a market analyst who declined to be named.

The S5 is set to be launched at the Mobile World Congress later this month.

Samsung’s annual R&D spending for all of its business divisions including mobile between June 2012 and June 2013 stood at $10.4 billion ― the second most across all industries, and the largest among IT firms worldwide, according to an October report released by leading global consulting firm Booz and Company.

Its 2013 R&D spending is now forecast to surpass $11 billion, and around $10 million or so is said to have been spent on developing Samsung’s flagship smartphone model.

Despite the heavy spending, the Seoul-based company still ranks third among the world’s most innovative companies, following Apple and Google, according to the same report. Market analysts said this reflects the firm’s inefficient spending and failure to shed the copycat image that has dogged it ever since the first Galaxy model entered the market.

Recent news reports revealing a glimpse of Samsung’s forthcoming smartphone indicate that the Korean tech company, which is striving to transform itself into an innovative leader, will likely remain a fast follower.

Some of the specifications reported so far include a 3,200 mAh battery, a fingerprint sensor embedded on the screen, new motion recognition technology, a QHD display and a waterproof body, which were introduced with few differences from the models of rivals including Apple and Sony.

“The new Galaxy smartphone is unlikely to boast much that would set it apart from products by Samsung’s rivals that may be released this year. It will be like one of the many similar devices,” said Song Jong-ho, an analyst at KDB Daewoo Securities.

Some critics attributed Samsung’s lack of innovation to the death of Steve Jobs, the former chief of Apple, because the Korean firm has lost a role model to copy.

“It has been rumored that Samsung is trawling around the world to find the next role model to follow, and some say Samsung is keeping an eye on Japanese companies and their technology,” a market watcher said.

Market analysts forecast that conditions in the mobile market this year will not be favorable to Samsung due to cutthroat competition and low-budget smartphone makers rapidly catching up in terms of technology advancement.

“With no mesmerizing innovations expected for the Galaxy S5, one measure available for Samsung to outpace other competitors is to secure efficient cost control in production,” said Lee Seung-woo, an analyst from IBK Securities.

More collaboration with Google can also give the Korean firm opportunities to win a competitive edge over competitors.

“Collaboration with Google will likely take place more often as it is rumored that Samsung will not use Tizen, an open-source operating system project co-led by Intel, for smartphones but only for other electronic products,” Lee said.

Google’s sale of Motorola Mobility to Lenovo also signals that the ties between the Internet giant and Samsung will be reinforced.

The two companies recently inked a cross-license deal which will allow them to access each other’s technology.

“The deal will give more leverage to Samsung in developing wearable and smart products such as smart glasses, lens and cars,” Lee said.

By Kim Young-won (wone0102@heraldcorp.com)

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