Samsung & Google – Engineering disease pt II.

The Chinese and Apple benefit from continued intransigence.

• I continue to believe that the best interest of Samsung and Google would be served by Samsung giving up software and Google giving up hardware and both working much more closely together.
• Not much has changed in the last year but there are a few tiny glimmers of hope that reality may be beginning to dawn on these two badly afflicted companies.
• Engineering disease relates to a condition where the desire to solve technical problems and do things oneself overrides business sense.
• Engineers often get so excited about whether they can develop something that they forget to consider whether they should develop that something.
• Engineering disease almost always ends in disaster and in the case of Samsung and Google, it is preventing them from improving their lot.
  • First, Samsung: In Samsung’s case, this refers to its belief that it can do software and AI which I think in the last 12 months has done more to damage the Samsung brand than to improve it.
  • I am referring to the atrocious Bixby which is a running industry joke and, in my opinion, has become a reason not to buy a Samsung device.
  • So bad has Bixby been that Samsung has had to continually move to block hacks that have allowed users to remap the Bixby button to other functions.
  • However, there is some good news as on the Galaxy s10 and variants, users will be able to remap the button to other functions.
  • Samsung has stopped short of allowing it to be remapped to Google Assistant, but it is a small step in the right direction.
  • Second, Google: has suffered a series of bouts of engineering disease that began with the acquisition of Motorola Mobility in 2012 and have continued with spending $1.1bn to acquire HTC’s design talent that has made no appreciable difference to the products.
  • The problem is that almost all of Google’s hardware acquisitions have felt great discomfort being owned by a company that does not really understand hardware.
  • The result has a lot of infighting resulting in products that carry fantastic AI and software innovations but have been plagued with fundamental flaws that no respectable hardware company would make (see here).
  • The reputational damage and Google’s difficulties in distributing physical products have meant that almost all of Google’s hardware is a rounding error in the market.
  • This has improved recently as the financial consequences of shipping very low volumes have finally pushed Google to make some cuts (see here).
  • These are initially in the tablet and laptop activities within Google Hardware, but hard questions must be being asked about the rest.
  • I have long held the opinion that Google has no rational reason to make hardware.
  • There is no way it can compete with Apple without taking its software fully proprietary which is unwilling o unable to do.
  • Furthermore, given that its Digital Life services are widely distributed by third parties, there is simply no point in making the hardware.
  • For example, in smart speakers, audio experts like Harman Kardon, Sonos and so on will be able to make better quality audio products at the same price.
  • As these will carry the Google Assistant, Google is competing in these segments purely on the basis of audio which makes no sense at all.
• From this, it is clear to me that Samsung and Google are a great fit.
• If Samsung was to abandon its aspirations to create in AI and work on a time-based exclusive deal with Google, I think its handsets and other devices would have far more appeal than they do today.
• Google has the best computational software algorithms which combined with Samsung’s best in class hardware would create much greater differentiation than the Samsung enjoys today.
• A much deeper integration of Google Assistant into Samsung devices rather than the universally awful Bixby would further set Samsung apart from the competition.
• From Google’s perspective, it would see its excellent innovations quickly in the hands of millions of users rather than a few early adopters and tech fans.
• This would really help the quality of the Google Ecosystem on Android make up ground on iOS.
• Obviously, Samsung would only have the exclusive on these technologies and features for maybe a quarter or two, but I think it really help its products close the gap to iOS on the iPhone.
• The problem is that both companies seem to believe that they can replicate each other’s core competence which reviews and market forces have clearly shown not to be the case.
• As long as this state of affairs persists, the advantage passes to the Chinese vendors like Huawei, Xiaomi, Oppo and Vivo who are increasingly looking to crush Samsung overseas as they have done at home.
• It also helps Apple which I consider to be second-rate in AI as Google’s best innovations that could attract users to Android remain effectively not present in the market.