By John Biggs
For most of the ten years I’ve been coming to CES, every presentation, every booth, has had one goal: to create an ecosystem in order to encourage consumer to lock in. Year after year, presentation after presentation, someone has come out to show how the phone will connect to the fridge which, in turn, will connect to the TV. And year after year, they failed.
Samsung (OTC:SSNLF), and to some extent the other vendors, have finally cracked it. For most of the past few years they’ve watched as Apple (NASDAQ:AAPL) ran circles around them in terms of media sharing and remote control. Obviously Apple’s systems have been limited to iPod/iTunes/iPad/Mac but Samsung, a major player in both the white goods and the mobile markets, can now have it all.
First, some numbers.
Samsung is number one in TVs for the sixth year in a row, selling approximately two TVs a second in November. While a minority of those TVs have been what Samsung is calling Smart TVs, all new TVs in 2012 will include boxless interactive television, which means a few things. First, it means Google (NASDAQ:GOOG) and Apple are in trouble. Two TVs per second definitely beats any performance metrics for Google’s platform and, more important, Samsung has headed off Apple at the living room media pass.
Then consider Samsung’s lead in cellphone sales. While many would argue that Samsung specializes in meh and me-too, 60 million cellphones sold in 2011 can’t be a fluke. This isn’t about Android or iOS or Windows Phone – it’s about Samsung making and selling millions of phones to millions of people. Samsung is mercenary. They’re happy to use anyone’s OS as long as it puts phones into boxes and boxes into shopping bags.
So you have two superlatives: biggest phone manufacturer and biggest TV manufacturer. Add in some tablets, some washing machines, and some acceptable software and you have a real and vibrant ecosystem. The next year will bring plenty of efforts to bring streaming media into the home, but the guy who is already there will win.
Before the iPod, there were plenty of small players in the MP3 player market but no one manufacturer had any real numbers. The market was perceived as too small. Now we have next-gen TVs. As people begin to understand the value of the Samsung Smart TV in its fourth generation and, in honesty, most of the early smart TV efforts by all major players were pretty bad, they’ll be happy to plop down a few hundred for a TV that can evolve every year with the addition little processer.
These new TVs are, obviously, “consumer electronics” devices so they’re rarely upgraded and rarely considered obsolete. Like bankruptcy, you shop for a TV gradually then suddenly. You live with the same TV until the kids start wanting to watch Tangled in HD or you see Grey’s Anatomy: The Musical in living 3D at a friend’s house. That’s why Apple has never made a TV: There’s no way to sell a new one every year.
Samsung’s success isn’t a sure thing. Incumbents rarely survive the revolutionary tidal wave of Apple’s design team and if history is any guide when/if the “real” Apple TV appears all of Samsung’s hard work will be forgotten as accolades roll in for Apple’s amazing (and I’m just guessing) retina display screen, built-in coffee-maker, and Scent-Surround smell emitters. However, if your Samsung phone and tablet can talk to your Samsung Smart TV and your Samsung aquarium pump, you may be inclined to stay in a single family when it comes to CE choices.
Apple could do this as will, and they are trying. But it will be difficult at best and “just a hobby” at worst. Samsung makes TVs. They make everything – the screen, the PCBs, and the case. Apple will be outsourcing their manufacture and they won’t be able to compete on price, especially when they’re buying panels from Samsung.
Can Apple beat other CE manufacturers at this game? Sure. They’ve done similar things before. But Samsung and Sony and LG have plenty of time to sell TVs and at two a second, Apple will have quite a bit of catching up to do.