With the Galaxy S7, Samsung is set to release a great phone this year…maybe. Historically speaking, the last time Samsung was set to release a really great phone – the Galaxy S4 – it landed a little flat. I’m not saying it was a bad phone, but the Galaxy S3 had done a lot to revitalize the brand, and the Galaxy S4 seemed more of the iterative variety. Then again, so did the Galaxy S5. Both were described as “disappointing” in some ways. The S6 similarly redefined the brand – “revitalize” is too strong a word for the S6. That being said, the S6 did a lot of things right and a couple of things not so right.
Now comes the Galaxy S7. The Galaxy S7 could be as close to a perfect smartphone we have seen to date. Or, it could follow the S4 pattern and be a minor upgrade. Personally, I don’t think the latter is going to happen, but let’s be honest, it could. What’s interesting about this story is that is doesn’t really matter what Samsung does with the Galaxy S7 because Samsung is going to win either way. That’s a bold statement, to be sure, but let’s take a look at why.
Good and better
The Galaxy S6 is already a really good/great phone (depending on how you feel about battery life). So anything that iterates on it will by definition be better. The Galaxy S6 brought a lighter operating system, a phenomenal camera, and Samsung Pay to the table. Really any one of those would be a win, but all three together helped revitalize the brand. It’s true, sales were not what they had been in the past, but the Galaxy S6 was such a solid phone, it gave Samsung a great foundation to build upon.
If the Galaxy S7 can manage to get better, it will be the phone to beat this year, no question. Rumors are already circling about a larger battery and waterproofing. Those two combined, along with a comparable camera and even lighter software will make a great device, if not a unicorn-like perfect device.
But something that is even more important to Samsung than the phone is the silicon inside. For as many smartphones as Samsung sells, it sells a lot more components for smartphones including the processor resting inside the iPhone. For those keeping score, the iPhone is arguably Samsung’s chief rival in the smartphone space. Samsung is making the processors for both. That’s a pretty comfortable couch to lie on.
Because each and every iPhone that goes out the door to three-day line riders is a little more profit for Samsung. This is not dissimilar to Microsoft and its Android patents that kept money rolling into its coffers. It actually behooves Samsung to keep pushing the envelope on two different fronts. On the one hand it makes money from the Samsung phones it sells, and on the other hand it rakes in cash with each iPhone that rolls out the door.
Some figures show 30% Samsung’s profits coming from semiconductors, largely those in Apple devices. In the meantime, those same figures show Samsung’s profits from smartphones themselves as declining. This in an of itself in not an indictment of Samsung phones so much as it is a celebration of greater Android diversity, especially in the low- and middle-tier smartphone market. Fortunately for Samsung, it can absorb the lower profits because of the semiconductors it is pushing out the door.
Samsung’s diversity outside the smartphone realm is one of its key strengths. But it’s funny because one of the first things we talk about when it comes to Samsung’s smartphones is the marketing machine that drives it. But it turns out, it’s not marketing that is driving Samsung’s profits. I don’t think Apple saw a billboard and though, “oh, maybe we should order from Samsung.” It’s the performance that Samsung is able to deliver that is making the money.
So, regardless what consumers or reviewers think of Samsung’s next flagship (though a few of us are really looking forward to it) Samsung as an entity will be just fine. It will still sell a ton of smartphones. But, unlike many of its competitors, Samsung’s future won’t be riding on those sales or lack thereof. Rather, the sales of another smartphone next September will have just as much say in Samsung’s future. And in case you haven’t been paying attention, I’m not talking about the Note 6.