Samsung closes Galaxy Note and bets high on foldables to face the iPhone

Deepak Gupta February 10, 2022
Updated 2022/02/10 at 5:04 AM

Samsung is making the biggest shift to its smartphone strategy in years, reorganizing itself around its foldable Galaxy S and Galaxy Z series of devices. The company plans to discontinue its Note line of stylus-equipped phones and instead roll out this feature across its portfolio, while pushing premium foldables in its challenge to Apple.

“In the short term, our operation will focus on a two-way strategy: the flagship S-series in the first half of the year and the innovative folding line in the second half,” TM Roh, who took over as head of mobile at Samsung two years ago . , said in a rare interview. “We will stick with this strategy until there is another major breakthrough and we are working hard to make that happen.”

The world’s biggest smartphone maker unveiled its latest Galaxy S22 lineup on Wednesday, outfitting the family’s Ultra model with a stylus. This effectively recreates the classic Galaxy Note formula of a large-screen device with a stylus, and comes months after Samsung opted not to launch a new Note in August. The company bet on its foldables filling the void and saw the move pay off with its category sales growing several times over and driving up its average mobile selling price.

Samsung will focus on the premium segment as its growth engine and plans to expand the Note experience across its Galaxy hardware ecosystem, encompassing tablets and laptops as well as phones, Roh said. Foldables will also grow into new categories and the company plans to add one or two new smartphone formats to its lineup over the next three years, he added.

“Under the COVID situation, the smartphone industry has gone through changes that previously could take a decade,” Roh said. “We are entering the second phase of market growth. There is a growing demand for premium, next-gen models as consumers are using smartphones longer and in more ways than ever before.”

The pandemic brought the smartphone market out of its stagnation – growth had stalled and replacement cycles were getting longer – and Samsung now sees people more willing to upgrade their phones for better video calling, gaming and daily communication functions at the same time. as they rely on their devices to work and play. Initial demand from carriers and partners for the Galaxy S22 phones increased by double-digit percentages from a year ago thanks to the new Ultra model, according to Roh.

“The Note series was getting a little long and it was a clear choice to absorb the S-Pen into the mainstream S series, especially when the company could now count on its successful folding line in the second half of the year,” said the IDC analyst. Bryan Ma. “Foldables do a lot more for Samsung by differentiating their offerings from the rest of the industry, including Apple, which also tends to release its new phones later in the year.”

Since the 53-year-old Roh was appointed to the post in January 2020, Samsung’s mobile business has had to deal with lockdowns in major cities, factory closures and chronic supply chain disruptions. The company has worked around the component shortage issues so far and expects the situation to improve this year, he said.

Samsung consolidated its mobile and consumer electronics businesses into a single division late last year as part of a company-wide reorganization. It did so to create a more cohesive product ecosystem, the company said. Making its devices work seamlessly together aims to help Samsung fight off competition from Chinese rivals like Xiaomi and Oppo, as well as tackling the challenge of Amazon’s Alexa voice assistant, which now encompasses everything from smart speakers to thermostats. Samsung will take a closer approach to Amazon than Apple, opening up its ecosystem to external partners and hardware manufacturers.

The Suwon-based tech giant sees the growing number of foldable devices from competitors this year as confirmation that it made the right strategic decision early on, according to Roh. The company expects the industry and application ecosystem to grow as a result. Many of the new models will likely use Samsung’s flexible displays in their designs, like the Oppo Find N announced in December.

Samsung is also investing in artificial intelligence and augmented reality technology, having pledged to secure a leadership position in metaverse development in its latest earnings call. Roh declined to provide details on those projects, but said the company is spending aggressively.

“We may look like a graceful swan, but we are furiously paddling underwater,” he said.

© 2022 Bloomberg LP

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