For some time now, Samsung have been promising to change their consumer electronics business' focus away from hardware development and more into software. The main reason for this is because it is becoming increasingly difficult to differentiate Samsung's Android smartphones and tablets from the competition. There are a number of reasons for this including how increasingly the individual components that make up the modern smartphones are becoming a commodity item. Here, cheaper and lower down device models are able to provide a smooth, joined up experience for the customer once reserved for flagship models. Companies such as MediaTek have introduced new, higher performance mid-range chipsets, and Samsung itself has contributed to this by selling its AMOLED panels at more affordable prices, meaning that more and more models are gaining this once-premium display type. It took Samsung six years to reach the Samsung Galaxy S7 hardware experience, developing and refining technologies as it went, but today there are many Chinese smartphone manufacturers offering comparable hardware. The number of ways to build a different device to the competition is being reduced, but one core way remains: the software experience.
We have seen Samsung investing a considerable sum into developing its own software platform, first with Bada, which has been evolved into Tizen. Samsung is still pouring millions into the platform; it has recently announced it is to support Tizen game developers with up to $1 million a month for the most downloaded titles (through payments of $100,000 per developer). Tizen has been evolved and shoehorned into smartwatches and has a home in the Internet-of-Things arena, but the platform remains an "also ran" given that almost nine in every ten shipped devices run the Android operating system.
The industry is particularly interested to see what impact switching towards software will make for Samsung's smartphone business, especially from the device hardware perspective. It is possible that the business has tried too hard - witness the battery failures of the Samsung Galaxy Note 7, which may be a rushed product in the interests of competition. This could encourage the company to slow down the hardware development and concentrate on improving and refining its software. And we have seen Samsung repeatedly say over the last couple of years that it will be paying more attention to the software rather than the hardware. We are seeing these signs, too. TouchWiz has been refined and smoothed over into Grace UX, with a cleaner, simpler and less cluttered look and feel. And some of the company's recent acquisitions have more of a software feel about them. One such example is last week's announcement that the business is buying NewNet Canada, which owns a next generation instant messenger service called RCS, for "rich communications services" technology. This could provide Samsung with a Hangouts-type of service going forwards. Back in October, Samsung also acquired VIV Labs, described as an "open platform AI business," which is believed Samsung will use to produce artificial intelligent services for Samsung smartphones. 2015 was an important year for Samsung's smartphone hardware and the Samsung Galaxy S6 family of devices showed the world that Samsung can still produce world-leading hardware. The question is, can they do the same for software in 2017.