- Samsung strives to differentiate itself from Android and iOS and use its massive electronics portfolio to create a giant ecosystem.
- While Samsung slowly develops its ecosystem, the company chose an inclusive approach in the interim period.
- Samsung future Tizen-based smartwatches will support iOS to attract new users to its evolving ecosystem.
- Tizen expansion could mean a significant revenue boost for Samsung.
In an earlier article, I described how Samsung Electronics (OTC:SSNLF) decision to launch its smartwatch product line with its ecosystem agnostic operating system, Tizen OS, is flawed. In that article, I explained that Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Alphabet Inc-C (NASDAQ:GOOG) built their ecosystems around a single dominant anchor device – the smartphone for iOS/Android and PC for Windows – that could gather the entire ecosystem around it. However, Samsung is trying to develop its ecosystem around a product category that is less than successful and could not hold the entire ecosystem. For Tizen OS to truly expand and compete with iOS, Android and Windows Samsung needs to develop it around a smartphone or PC and do its best to make these devices globally and commonly available. Tizen OS right now cannot compete with the three leading ecosystems.
The original article was published in mid-December 2015, and two weeks after that, Samsung made a dramatic announcement that its next smartwatch generations will run Tizen and will be compatible with Apple iOS. It is not a secret that Samsung’s attempts to expand its Tizen ecosystem is lagging behind the three big competitors. Samsung introduced a Tizen-powered smart-TV and smartphone; however, they neither gained significant market share nor succeeded in driving substantial attention to these devices.
Samsung identified the advantages of having its independent ecosystem from Android and iOS that could drive a higher level of interaction and commitment from customers to the Samsung brand and its future devices. That way, Samsung could drive higher revenue from future initiatives. Right now, Samsung has in its portfolio PCs, tablets, smartphones, smart TVs, smart watches, and many other smart devices on top of the Samsung Pay and Samsung app store services.
Once all devices and services run Tizen, Samsung could create a powerful and significant ecosystem that could compete with the three big ecosystems. However, there is a long way to go before Samsung’s attempt to differentiate itself from Google’s Android and Apple’s iOS by developing a new ecosystem is successful, and while Samsung slowly progresses in that direction, it is important that it should not lose any of its existing customers and even try to attract new customers to Tizen.
Samsung cannot change the operating system on all of its devices from Android to Tizen overnight. These types of changes take time and requires the customers’ willingness to participate in the switch, for which it needs to bring added value to the users. Also, I’m not sure to what extent Samsung is ready for such a move in regards to software stability, compatibility with many types of devices, and broad expansion readiness.
To address Samsung’s interim OS ramp-up issues, the company chose to add iOS support for its future smartwatch to attract more customers. Their target audience is probably iPhone users who don’t want to spend $600 on a watch, for whom Samsung Gear could be a perfect fit. By luring iPhone users to try the new Samsung smartwatch, Samsung aims to expand unit sales and Tizen market share while breaking the walls of the iOS ecosystem.
For iPhone users, this move makes a lot of sense, and it will bring Samsung Gear on-par with Fitbit Inc (NYSE:FIT), Pebble, and Jawbone, which already have a native iOS support. However, unlike these small pure-play companies, Samsung is adopting its inclusive approach as part of a broad strategy to strengthen its in-house operating system and seperate from Android in the long run. For investors, the successful expansion of the Tizen ecosystem worldwide and leveraging the huge popularity of Samsung’s electronics devices around the world could drive significant revenues in the future from repeated refresh cycles, upgrades, app store revenues, and adjacent services.
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