Google and Samsung – Engineering disease pt. IV

Samsung inches towards a cure.

• Not only are Google and Samsung in discussions for Google to have a bigger role on Samsung handsets (see here) but there have been a string of departures from the Bixby team further indicating how poor Samsung’s AI really is.
• Many of these defections are members of the original Viv Team that Samsung acquired and were part of the original team that created Siri.
• This is a sign that Samsung is scaling back its investments in this area probably driven by a need to conserve margins in the face of a weak, pandemic triggered, smartphone market.
• The net result is likely to be deeper integration of the Google Ecosystem into Samsung’s phones which benefits Samsung in 2 ways.
  • First: market share: Samsung’s Bixby digital assistant is so bad that I have long viewed Bixby as a reason not to buy a Samsung smartphone.
  • This situation is demonstrated by the long-running whack-a-mole between Samsung and developers where developers would work out a way of remapping the Bixby button to something else which would then be blocked by Samsung.
  • There is no doubt in anyone’s mind that Google’s services are light years ahead of Samsung’s meaning that if they are set by default on the device, then the overall user experience will improve.
  • This has the added advantage to the user of not having a load of “bloatware” on his device that Samsung won’t let him delete.
  • A better user experience makes Samsung devices more attractive compared to competing devices which should result in higher market share.
  • Second: money: Google pays handset makers for generating traffic and Samsung’s strong position in Android puts it in a strong negotiating position.
  • I estimate that Google will pay Apple around $5bn in 2020 for the traffic that its phones generate and, while Samsung will get anything like this amount, what it does get will be pure profit that falls straight to the bottom line.
• At the height of AI’s hype and popularity (2018 and 2019) Samsung talked up its prowess in AI and invested heavily.
• By getting more of this from Google it can also cut its investments in AI which what I think these departures are all about.
• I continue to think that the best route for both Samsung and Google is a very close co-operation and the fact that Samsung is even considering this means it has realised that its own efforts are not delivering the results desired.
• This gives me a glimmer of hope that Samsung is starting to recover from its affliction of engineering disease (see here) resulting in a more pragmatic and profitable strategy and company going forward.
• I can see myself becoming positive on Samsung once again.