How Samsung Became The World’s Top Handset Vendor

Products by Samsung

It sounds like Nokia’s classic ringtone just got a few octaves lower and sadder. Friday, Strategy Analytics revealed the Finnish phone-maker had been ousted from its lofty position at the top of the cellphone food chain. Samsung just became the leading shipper of mobile phone handsets in the world. How did this happen? The same way a runner in any race pushes to the front: He speeds up, or the other guy slows down. Sometimes both happen at once.

There’s a kind of morbid fascination involved in watching a formerly great goliath stumble: we’ve seen it over the past few years in the mobile space with RIM and Palm (and then HP), but seeing Nokia trip over itself has been akin to witnessing a revered grandfather fall down the stairs. Nokia practically created the mobile phone industry; until recently its brand name was unassailable in most parts of the world, with the curious exception of the United States.

The nature of their missteps has been well-documented, but suffice to say that Nokia CEO Stephen Elop made some difficult choices. He made these choices rather publicly in his “burning platform” memo of February 2011, which, depending on who you ask, either told some hard truths or needlessly eviscerated Symbian sales at a critical point in the company’s history. Whichever view one takes, the fact remains that Nokia didn’t start shipping devices built on its new OS of choice, Windows Phone, until much later in 2011. Perhaps it was unavoidable, but that delay cost them dearly.

As is usually the case with platform wars, the data isn’t exactly clear regarding all the factors surrounding Nokia’s decline. It’s true that the Windows Phone platform has been slow to gain traction, but Nokia was also woefully behind in developing a replacement for Symbian -or even in realizing that a replacement for Symbian was needed- before Elop showed up. To anyone paying attention, the decline seemed inevitable, given the company’s lack of agility.

Seeing Nokia reinvent itself, with the accompanying beautiful design work coming from its hardware division, has been truly incredible; speaking personally as a consumer, the N9 and its derivatives are the reason I started noticing Nokia. But beautiful design and the most interesting innovations, while an indicator of potential greatness, are lousy at arresting downward momentum. A fall from grace was overdue, and it’s finally materialized. After watching storm clouds gathering on the horizon for months, a massive 24% decline in handsets shipped year-over-year is Nokia’s barometer finally crashing into the basement.

So it was only a matter of time before Nokia lost the number-one spot. But the king who loses the crown is only half the story. What steps did the new guy take to snatch it from his head?

Samsung’s current lead over Nokia is in part a byproduct of its war with Apple. In an editorial a while back, I talked about the voracious appetite of second-place companies. There, the conversation was smartphone mind-share, and the leader was Apple, but the second place contender was still Samsung:

    “… Marketing head Younghee Lee recently said, ‘Especially in U.S., people are obsessed with Apple … It’s time to change people’s attention.’ One need only look at the recent patent and advertising war between the two giants to confirm it: Samsung covets Apple’s leading mindshare position in that special way that only a second-place contender can. They’ve got their eye on the prize, and they’re fighting for it.”

Samsung’s approach to satiate that hunger for success has been unexpectedly multifaceted: instead of focusing its efforts on innovation, marketing, or emulation, it’s done all three.

Look at what Samsung has released in just the past year and a half. The Galaxy Note, initially considered a novelty item or a target of mockery by many (myself included), sold 5 million units in five months. It carved out a new “phablet” category not just for itself, but for a host of imitators. “Note”worthy indeed, and not bad for a device many thought was DOA.

The company brought the same zeal to the second coming of its popular Galaxy S smartphone series, once again blasting carrier after carrier with premium versions and midrange derivatives. Where the original Galaxy S devices still suffered a tad of stigma from “regular” consumers associating it with an iPhone knockoff, the growing brand prestige of Samsung had eliminated any such comparisons by the time the Galaxy S II line debuted.

Apple, much more potent a competitor than Nokia but equally as sluggish, refused to incorporate larger AMOLED displays, giving Samsung some purchase for easy visual differentiation. Once buyers’ eyes were attracted by the larger devices, they were drawn in further by the promise of the Android ecosystem and the more advanced capabilities of the Samsung devices, further reinforcing the Samsung brand perception.

At the same time, that brand was being heavily pushed by an aggressive marketing approach. Samsung was taking jabs at — and in some cases openly insulting — iPhone users, a controversial tactic it continues even today with its “The Next Galaxy” teaser. The company isn’t afraid to ruffle some feathers in the name of increased mindshare, and judging by its new title, it hasn’t hurt them much.

Even the “bad press” seems to be working in Samsung’s favor. I’ve talked before about my lack of enthusiasm for some of Samsung’s “me-too” products; sometimes it seems like they’re brazenly copying the competition. Some elements of the competition seem to think so too, as Samsung’s been the target of numerous lawsuits recently. But all the accompanying exposure in the media is doing something invaluable: it’s keeping their brand name on people’s screens and in their minds. Ironically, the alleged untrustworthy conduct (copying) is working in concert with its impressive product portfolio to cement the Samsung’s brand name as a trusted one, at least when it comes to mobile phones.

These massive upheavals don’t happen often. They’re the result of years and years of hard work and determination on the part of one company, and stagnation or mismanagement on the part of another. The last time the number-one spot on mobile handset vendors list changed was 1998, when Nokia dethroned Motorola. Fourteen years is an impressive run.

That’s not to say this change is permanent; it’s a volatile and unpredictable market. Nokia and Samsung are very different companies who couldn’t possibly be taking more disparate routes to success. And at the moment, the results they’re seeing are very different, as well. But the fact that Samsung is now the market leader shouldn’t be perverted into a reason to condemn Nokia’s new strategy; Nokia’s midstream shift was violent, and will take a long time to recover.

The longer it takes, though, the more opportunity Samsung has to continue leveraging its considerable advantages to stay on top. Given the uncertainty surrounding Nokia, it’s anyone’s guess when or if we’ll see it on top again. But judging by past performance and looking at who’s sneaking up behind Nokia (a certain Cupertino company), we may see a shift in the second- and third-place slots before we see another change in the first.

News by Mashable

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Samsung confident of outselling Nokia in 2012

Samsung Store

(Reuters) - Samsung Electronics Co is confident it will become the world's largest cellphone maker in 2012, ending Nokia's 14-year reign on the mobile handset market, its chief executive said.

Samsung, which became the world's No 1 smartphone maker in the third quarter of 2011, is quickly building on its supremacy with sleek designs and a rich product lineup, while the latest models from the likes of HTC, Nokia and Research In Motion struggle to interest consumers.

Samsung chief executive Choi Gee-sung told reporters in Las Vegas on Monday the company overtook Nokia in revenue terms in its latest reported quarter and was confident of topping the Finnish group in shipments this year.

That would mean another defeat for Nokia, which lost its decade-long dominance in smartphones to Apple in the second quarter of 2011.

Finland's Nokia rose to the top of cellphone industry in 1998 when it overtook Motorola in phone sales, and has since been the driver for the Nordic economy.

Samsung's bullish forecast is in line with some analysts, including Royal Bank of Scotland, betting Samsung would build on its momentum to overtake Nokia in 2012, but on average analysts have expected Nokia to keep its lead on the market.

According to the latest polls by Reuters, Nokia was expected to sell 418 million phones in 2011, versus Samsung's 320 million, the gap narrowing this year to 388 million versus 359 million.

The South Korean firm -- the world's biggest technology company by revenue -- said in early December its 2011 handset sales reached 300 million handsets for the first time, mainly led by a near four-fold jump in smartphone sales.

"Considering how strong Nokia still is in the emerging markets, Samsung's expectation seems to imply that Nokia will miserably fail in mature markets," said Gartner analyst Carolina Milanesi.

Analysts expect cellphone market growth to slow in 2012, with weak demand seen in Western Europe, but stronger demand for emerging markets, which have historically been Nokia's stronghold.

"I think it will be hard for Samsung to beat Nokia without more aggressively targeting emerging markets," Milanesi said.

Choi also said Samsung was likely to meet its 2015 sales target ahead of schedule and plans to increase investment this year.

"With the current sales growth rate, we are likely to... achieve the 2015 sales target of $200 billion earlier," Choi told reporters.

Samsung last week reported a 6.5 percent rise in 2011 revenue to 164.7 trillion won ($141.54 billion).

($1 = 1163.6500 Korean won)

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HTC Android Phones Are Being Banned from the US Next Year

Apple VS HTC

Apple just won a big court victory against HTC that could force HTC to stop selling its Android phones in the United States. The United States International Trade Commission ruled that HTC was infringing on an Apple patent that effects HTC Android devices running Android 1.6 to 2.2.

The devices that may be banned from being sold in the U.S. is basically a who's who list of Android phones: Droid Incredible, Evo 4G, T-Mobile G2, Nexus One and a bunch of older Android devices. The patent that the courts ruled HTC was infringing on (#5,946,647) is potentially a big one. According to Fortune, who took a deep look at the specific patent, it works like this:

When an iPhone receives a message that contains a phone number or an address — e-mail, Web or street — those bits of data are automatically highlighted, underlined and turned into clickable links.

Click on the phone number, and the iPhone asks if you want to dial it. Click on the Web address, and it opens in Safari. Click on the street address, and Maps will display it.

That's huge, not only because it's an important feature in smartphones but because it could mean Apple could go on to attack other Android phone makers because it's the OS that's infringing the patent, not the hardware. However, if HTC Android phones removed that feature (unlikely) or implement it in a different way (which we expect HTC to do), they could keep on selling. And that's pretty much what HTC expects to do, HTC, which has responded to this decision with rainbow colored unicorn tears, reached out to us with this statement:

This decision is a win for HTC and we are gratified that the commission affirmed the judge's determination on the ‘721 and ‘983 patents, and reversed its decision on the ‘263 patent and partially on the ‘647 patent. We are very pleased with the determination and we respect it. However, the ‘647 patent is a small UI experience and HTC will completely remove it from all of our phones soon.

Yes, the patent in question is a fixable problem but I'd hardly categorize the court's decision as a win for HTC. If HTC doesn't fix this issue however, the ban on HTC Android phones in the US is set to take into effect on April 19, 2012. That's not winning.

There are still some real moves left for HTC to make to avoid the import ban (a Presidential veto is an option) but this is sure setting up for a major stateside war (thermonuclear, even) between Apple and Android phone makers much like with what's happening with Apple and Samsung Tablets in Europe and Australia.

News by Gizmodo

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Insight: Apple vs Samsung lawsuit full of secret combat

Apple-Samsung

(Reuters) - The biggest legal battle for the technology industry is playing out in a federal court in Silicon Valley, where Apple is trying to stop Samsung from selling Galaxy phones and tablets in the United States.

In the lawsuit, filed in April, Apple accuses Samsung of "slavishly" ripping off its designs for the iPad and iPhone. Although there is worldwide interest in the case, the proceedings have largely been shrouded behind a veil of secrecy: most of the court papers are sealed, meaning they can't be viewed by the public.

Filing documents under seal has become almost standard procedure in many intellectual-property cases -- like Apple versus Samsung -- as companies claim their trade secrets and confidential information could come out during litigation. Judges have surprisingly wide latitude in deciding what should be kept under wraps and what shouldn't.

Some courts, like the U.S. District Court for the Northern District of California, where the case is being heard, have rules requiring that judges specifically sign off on every request to seal a document -- but these rules set no deadline.

In the Apple/Samsung case, some secrecy requests have languished for months while investors, academics and tech bloggers struggled to piece together whatever bits of information were available.

In every instance that she did issue a ruling on a sealing motion, U.S. District Judge Lucy Koh in San Jose granted the request. Just this week she approved six more motions to seal. Samsung's most crucial legal brief became available after months of delay -- and then only in redacted form.

The stakes here are high: Samsung had 23.8 percent of the global smartphone market in the third quarter, nine points higher than Apple. Yet Samsung's holiday sales could be jeopardized if Koh, who is expected to rule any day, grants Apple's motion to halt Samsung's sales of Galaxy.

Lack of transparency in the courts troubles many observers.

"For the judicial system as a whole, we want transparency so the public can have confidence in the judicial decision-making process," said Bernard Chao, a professor at the University of Denver's Sturm College of Law. "When things aren't transparent, that view is undercut."

In an email on Thursday, Koh declined a Reuters request for an interview on her sealing decisions in the Apple/Samsung case, or about her general policies. However, shortly after the inquiry from Reuters, Koh issued new guidelines governing sealed documents in her courtroom.

Koh's guidelines, posted on her official website, mandated that parties file a redacted, publicly available version of every document that they seek to seal -- at the same time they make the sealing request.

Koh and U.S. Magistrate Judge Paul Grewal, who oversees certain procedural motions in the case, are newcomers to the federal bench and were both previously intellectual property lawyers representing companies at large law firms. They have not only granted many of Apple and Samsung's sealing motions, in some cases, they've gone a step further.

During an October hearing on the proposed injunction, Koh, unprompted, asked Apple and Samsung if they wanted to seal the courtroom. When the lawyers said such a step wouldn't be necessary and that they would not mention confidential material during the hearing, Koh commented, "I guess if you all can be careful not to disclose anything that requires sealing, then we can still have that with the open public."

Representatives from Samsung did not respond to a request for comment on Thursday, and an Apple spokeswoman declined to comment.

Secrecy in the courts is an ongoing concern. The policy body of the federal courts recently reminded judges to limit broad sealing of cases, and interest groups such as Public Citizen and the American Civil Liberties Union frequently intervene in cases where major records are sealed.

For their part, investors look at briefs and filings to see what kind of effect a patent is having on the marketplace, professors study them for novel legal theories, and lawyers track them for developments in intellectual property law.

Like Koh, many federal judges routinely grant requests to seal documents. In the Eastern District of Texas, where the docket is always clogged with patent cases, lawyers don't even need permission from the judge to file documents under seal, said Michael Smith, an IP attorney who practices there.

"The court has made it as easy as they possibly can," Smith said.

Judges say it's a balancing act.

"It comes down to: 'how do you see the interplay between transparency and protecting the interests of the party,'" said U.S. District Judge Jeremy Fogel, director of the Federal Judicial Center, in an interview. "Transparency sounds so noble, so apple pie, but the interests of the parties are important, too."

The release of Samsung's redacted brief this week demonstrates some of the inconsistencies in what gets sealed, and why.

Previously, Koh had sealed a separate document because, according to Samsung, it contained "unreleased product launch dates, and information relating to Samsung's total number of employees, and the number of employees involved in the design and marketing of the products at issue."

Samsung said references to other confidentially-filed motions in the case justified its sealing, and Apple did not object.

But in the key Samsung brief released this week, even the redacted version revealed not only numbers of Samsung employees (more than 8,500 engaged in telecommunications research and development projects), but also the dollar amount of its research and development costs (over $35 billion for electronics product lines from 2005 to 2010).

When there isn't pushback from one of the parties, judges typically grant sealing requests without much scrutiny, said Chao, the University of Denver professor.

"I think at times they are just overwhelmed," Chao said.

Even contemplating closing a courtroom, as Koh did, shows an unusual level of accommodation to the parties, said Richard Marcus, a professor at University of California Hastings College of the Law, and can also erode trust in the courts.

"Locking the courthouse doors in a trial-like situation is extremely rare and requires exceptional circumstances," he said.

In fact, 50 miles from the Samsung/Apple battle, U.S. District Judge William Alsup in San Francisco has taken the opposite tack in the monster IP fight between Oracle and Google over the Android operating system.

Since Oracle brought suit in August 2010, Alsup has rejected more than a half-dozen requests from the companies to keep material secret and issued a number of harsh warnings.

Among other documents, Alsup unsealed an email drafted by a Google engineer saying Google needed to negotiate a license for Java -- the programming language Oracle has accused Google of infringing.

Google investigated alternatives to Java for Android and concluded "they all suck," the email said. Alsup even read the email aloud during a July hearing. (Google has asked an appeals court to overturn the unsealing).

"The United States district court is a public institution, and the workings of litigation must be open to public view," Alsup wrote in an October order. Alsup declined to comment, as did an Oracle spokeswoman. Google representatives did not respond to a request for comment.

For David Sunshine, a New York lawyer who tracks technology cases for hedge fund investors, judges like Alsup who challenge companies on sealing requests make the job much easier. "I love those guys," Sunshine said.

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