Samsung is finding that increased demand for its touchscreen phones doesn’t necessarily lead to increased profitability — which is why investors will be keeping a close eye on next week’s unveiling of bada, an open mobile platform designed to sit atop the company’s proprietary operating system.
Samsung will offer details about the platform and deliver the SDK at a media event in London. If the company can attract developers to the platform, bada could be a key differentiator for Samsung, boosting overall phone sales and helping to shore up diminishing margins. So the platform could play a huge role as the smartphone space increasingly becomes centered on software — not hardware.
The world’s No. 2 manufacturer said Monday it is on track to exceed its 2009 sales target of 200 million phones, with touchscreen models accounting for roughly 20 percent of sales. Its global market share rose 20 percent in the third quarter, Samsung said, with a profit margin holding strong at 10 percent. That margin is likely to shrink, though, as the smartphone space continues to heat up and vendors lower prices to boost market share. Deutsche Bank recently reported a 1 percent drop in the average selling price of handsets worldwide, and the price-cutting probably will continue as vendors try to deplete their inventories and new models come to market. And Samsung is bracing for a fight on its home turf of Korea, where the iPhone came to market this week.
Samsung has gained substantial traction thanks primarily to its hardware — not its software or mobile Internet services. But the company hopes to address those shortcomings with bada. While little is known about bada, it appears to be an attempt to bridge the gap between smartphones and feature phones, enabling developers to create full-blown apps for handsets that might not run a traditional OS. Bada seems to be designed to help developers address a broad base of handsets simply by making a few small tweaks to existing smartphone apps. And, as GetJar has proven, there’s a substantial demand for apps by users who don’t own high-end smartphones. If Samsung can find a way to bring higher quality apps to a wide swath of devices — and if it can lure developers to bada — it will continue to thrive.