Samsung’s splashy launch party for its fourth-generation Galaxy S mobile device isn’t going to have much of an impact in its war with Apple. That’s because the battleground for dominance in the mobile space has shifted away from the hardware and physical design of phones and toward their software, specifically the operating system. The real battle for mobile dominance looks like this: Apple, with its iOS ecosystem, is in one corner, and Google, with its Android system, is in the other. Whichever wins over consumers will ultimately decide the victory.
Samsung Electronics’ 44th Annual General Shareholders’ Meeting (Photo credit: samsungtomorrow)
The launch of the new Galaxy S4 in New York this week has the tech media churning out post after post examining how this new phone could impact the mobile phone space in the U.S. But all this digital ink isn’t necessarily being spilled because the public is excited about the launch of yet another mobile phone. No, this is all about Apple. Specifically, how this new phone will stack up to Apple’s latest iteration of the iPhone, the iPhone 5.
But I don’t expect to be wowed when the new device is finally in hand. That’s because the new Galaxy doesn’t have much we haven’t seen before on a mobile device. It features a 5-inch, high-definition screen that can be used while wearing gloves. Thin and light, it packs 2GB RAM and will come with a 1.6GHz Exynos Octa-core chip or a 1.9GHz quad-core Qualcomm, depending on the region in which it is being sold. The phone can pull off a few neat software tricks — like translating spoken language.
And yet, real innovation in smartphones seems to have hit a plateau. Take a phone’s camera: The iPhone 5 has an eight-megapixel camera while the new Galaxy S4 has a 13-megapixel camera. To that I say: whoopee, big deal. Anything above five or six megapixels is basically wasted on the vast majority of people who are just interested in getting a clear enough picture of their dinner or their friends to post on Facebook. If anything, the larger pixel size is a negative as the pictures will eat up a lot more space on the phone’s memory, leaving less space to store music, apps, and the like.
The Galaxy S3 and other high-end phones like HTC’s OneX+ or Sony’s Xperia Z have already proven that they are as good as or even better than the iPhone. That isn’t the issue. Samsung has clawed its way to the top of the high-end mobile market in the U.S., not by making a superior phone, but by spending buckets of money on advertising. The Korean giant spent a whopping $401 million in the U.S. alone advertising its cell phones in 2012, according to ad research and consulting firm Kantar Media. Apple spent $333 million. HTC, Sony and Nokia didn’t spend much at all, reflecting their poor market share in the high-end mobile arena.
But there are diminishing returns when it comes to advertising. At some point, Samsung will have to be able to woo a new customer over to its side by simply having a better all-around product. (Some argue vociferously that this is already the case.) But Samsung has a major issue here in that it doesn’t have control of the most important parts of a phone, the operating system and the accompanying online media store.
Samsung relies on Google , and to a lesser extent, Microsoft, to provide the operating system on nearly all of its phones. This has allowed Samsung to save a lot on research and development (Google gives Android away for free), but it has also tied its hands when it comes to eliminating a major revenue stream of the mobile market — media sales. There is a relatively high switching cost when a person goes from Google to another operating system, such as Apple’s iOS. The time that needs to be invested in simply learning a new operating system is enough to make even the most tech savvy nerd sick. Apps bought on one system, though they are by the same company and do the same thing, aren’t compatible between systems, meaning you have to buy them all again, a costly measure for many people.
“Android has a global partnership of over 60 manufacturers; more than 750 million devices have been activated globally; and 25 billion apps have now been downloaded from Google Play,” Larry Page, Google’s chief executive, wrote in a blog post this week. “Pretty extraordinary progress for a decade’s work.”
At last count around 70% of smartphones run on Android. That’s both a blessing and a curse for Samsung. On one hand, it is great, as the larger market share means that a lot of people are now familiar with how to use Android and have some sort of tie with the Google Play Store. But on the other hand, it also means that a customer could pick up a dozen phones by an array of manufacturers and basically walk away with the same experience as they would have with a Samsung device. (Naturally, Apple’s closed system avoids this very problem.)
Samsung’s lack of power designing the core software that runs on its flagship mobile device makes it tough to celebrate the launch of the S4 — even if it can do a few new things. Copying hardware is not the game anymore; rather, it is more about who can build a long-standing, sticky relationship with customers after that initial sale is made. Apple and Google are basically the only two players in this new war — one in which Samsung, for the time being, can’t even participate.
JPMorgan Chase & Co.’s Douglas Braunstein was grilled by U.S. senators after saying he couldn’t remember how Chief Executive Officer Jamie Dimon reacted when the bank resumed sending reports to a regulator.
Democrat Carl Levin of Michigan, the head of the Permanent Subcommittee on Investigations, asked about Dimon’s reaction after a panel report yesterday saying the CEO told executives last year to stop sending the investment bank’s daily results to the Office of the Comptroller of the Currency. Dimon believed “it was too much information,” the report said, citing an interview with an OCC examiner.
Douglas Braunstein, vice chairman of JPMorgan Chase & Co., arrives to a Senate Permanent Subcommittee on Investigations hearing in Washington on March 15, 2013. Photographer: Andrew Harrer/Bloomberg
Levin pressed about an account in the report that Dimon “reportedly raised his voice in anger” after learning that Braunstein, then the chief financial officer, began to provide the data again to the OCC.
“I don’t recall the specifics of his reaction,” answered Braunstein, who is now vice chairman. Braunstein told the senator at least two other times that he couldn’t remember specifics.
By not releasing the information to OCC “in the normal course of business, they gave rise to an immense amount of regulatory risk, as we’re seeing right here,” said Clifford Rossi, a former risk manager and managing director at Citigroup Inc. who now teaches at the University of Maryland’s Robert H. Smith School of Business. “In this situation, it makes it look like he had something more to hide.”
Braunstein and Dimon were named in the report as executives who misled investors in April of last year when they discussed a portfolio of credit derivatives at the chief investment office that eventually posted more than $6.2 billion in losses. The former CFO said today that Dimon was concerned about the confidentiality of the reports when the bank stopped supplying information to the OCC.
“Do we live in a world, Mr. Braunstein, that government regulations of our businesses and our lives, we just decide, well, because we’re concerned about something, we’re not going to comply with the regulations,” asked Arizona Senator John McCain, the ranking Republican on the panel. “Is that how JPMorgan works?”
“No sir, it does not,” Braunstein replied. Dimon was not a witness at today’s hearing after being questioned last year by panels in the Senate and House of Representatives.
The dollar fell after touching its strongest level versus the euro since December as European leaders debate loosening the shackles on national budgets to address economic weakness amid the region’s debt crisis.
Bloomberg Cockpit #3 (Photo credit: rbanks)
The yen gained against the greenback after trading at almost the weakest since August 2009 as the lower house of parliament endorsed Haruhiko Kuroda, an advocate of increased stimulus, as the next central bank governor. Australia’s dollar climbed to a one-month high after a report showed payrolls rose to the highest in almost 13 years. The pound rose after this week touching its weakest level since 2010.
“People have perhaps become a bit leery of selling the euro and selling the pound at such low levels, and that perhaps accounts for some of the snap back,” Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in New York, said in a telephone interview. “The Aussie dollar is benefiting from an extremely strong employment report.”
The dollar fell 0.3 percent to $1.3005 per euro at 5:07 p.m. in New York, after touching the strongest level since Dec. 10. The greenback was little changed at 96.11 per yen, after depreciating to 96.71 on March 12, the weakest level since August 2009. The yen lost 0.3 percent to 124.99 per euro.
“The data that we’ve seen recently has been really surprising to the upside, and the U.S. dollarhas been responding positively to that,” said Eric Viloria, a senior currency strategist at Gain Capital Group LLC in New York
The gauge is forecast to decline to 81.6 by the end of year, according to the median forecast of economists surveyed by Bloomberg.
German Chancellor Angela Merkel went into a European Union summit today urging a stepped-up fight against youth unemployment, now over 50 percent in Greece and Spain, and skipped the appeal to fiscal discipline that has been her standard message throughout the debt crisis.
The euro zone’s continued economic slump has shoved aside the financial crisis as the bloc’s biggest headache, leading the EU to push back deficit-reduction deadlines and making it perilous for politicians to wrap themselves in the flag of austerity.
The euro has gained 1.5 percent this year among 10 developed-nation currencies tracked by Bloomberg Correlation- Weighted Indexes. The dollar rose 3.1 percent and the yen lost 8 percent.
Key dates in Greece’s debt crisisSan Jose Mercury NewsATHENS, Greece—A look at key dates in Greece s financial and political crisis. Oct.
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