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Analyst Says Samsung to Face “Innovator’s Dilemma” Soon

November 3, 2015 - Written By Tom Dawson

There’s an old saying that we’re sure many an analyst has used before now that goes something like “the bigger they are, the harder they fall”. Where Samsung is concerned, constantly vying with Apple for the top-spot in the smartphone arena, it’s easy to say they’re a giant, and where their “fall” is concerned, one analyst things that Samsung could suffer from “Innovator’s Dilemma” and leave the business altogether within the next five years.

Ben Bajarin, a Principal Analyst from Silicon Valley firm Creative Strategies has published an article at Tech.pinions that suggests Samsung cannot keep up selling $600+ phones in a world where those at $200 – $400 are more than “good enough” for a lot of users. This sort of problem is considered to be the “Innovator’s Dilemma”. Essentially, this refers to early innovators that stake their claim early on end up being toppled by those that can play ‘me too’ with devices that pull many of the same tricks, but for much less. Bajarin says that “Android devices in the $200-$400 range are good enough for the masses leaving Samsung’s $600 devices and above stranded on an island.” Bajarin goes on to make a wager with himself, simply saying: ” I’ll make a prediction. Samsung will be out of the smartphone business within five years.”

There is some truth to the fact that Samsung is coming under attack from budget-minded handsets like the OnePlus 2, the Moto G and even the likes of the ZenFone 2. These are excellent devices that tick most of the boxes for the majority of users, and they cost much, much less than a shiny Galaxy S6 Edge+ (pictured above). The ‘problem’ here, reasons Bajarin, is Android. After all, if you’re all selling devices running the same essential operating system – offering the same apps and games – then how much incentive is there left for some to spend twice as much to get a Samsung over a cheap Moto G, for instance? This is presumably why ‘Innovator’s Dilemma’ doesn’t happen to Apple in mobile, as they’re the only people that sell iOS-powered device, they have that corner of the market locked down.

With high-price devices come big marketing budgets however, and there’s a reason Samsung is King of the Hill when it comes to Android: people know who Samsung are. People know who Motorola and HTC are as well of course, but they know that Samsung “is better”, simply because of aggressive marketing plays. It’s pretty hard to escape an ad for a Galaxy S6 or Galaxy Note 5. The problem that Samsung has is that yes, their budget offerings are too expensive and cannot compete with the likes of the Moto G and others, not that their high-end flagships are too expensive. Samsung should see writing on the wall and either create better budget-minded devices for less, or simple refocus on offering the best of the best when it comes to Android.