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Seoul - Samsung’s challenger to Google Android software is moving from phones to big-screen TVs as the South Korean company tries to capitalise on the burgeoning interest in smart homes.
The world’s biggest maker of TVs will unveil the first sets powered by Tizen software at the Consumer Electronics Show (CES) in Las Vegas this week, and all the web-connected models Samsung sells this year are expected to run the operating system.
The company may also demonstrate at CES how the TVs communicate with its washing machines, refrigerators and vacuum cleaners.
Samsung’s controlling Lee family is trying to reinvent the electronics maker as a purveyor of internet-connected appliances to grab share of a market that may be worth $7.1 trillion by 2020.
Samsung wants to generate revenue from Tizen applications and services just as Apple and Google do from their operating systems, and the company is emphasising TVs and consumer electronics after falling a year behind schedule on a Tizen-based phone.
“In smartphones, there’s no chance that Samsung’s Tizen can edge out the two dominant operating systems,” said Claire Kim, a Seoul-based analyst at Daishin Securities.
“But in TVs, Samsung may have a chance.”
Samsung’s rise to No. 1 in global phone sales depended on Google’s Android system. Nearly all of the 243 million smartphones Samsung shipped through September 30 ran the software, which Google typically gives away in return for mobile advertising revenue and a share of app sales.
Phone supremacy
Samsung faces the strongest challenge to its phone supremacy after posting the smallest quarterly earnings in more than two years. Operating profit at the mobile-phone unit, the company’s biggest cash generator, slumped 74% in the September quarter and sales fell about 33%.
That’s prompting the company to look for new sources of revenue. Tizen emerged after Samsung joined Intel and NTT Docomo, among others, to develop an alternative to Android and build its software capabilities.
Helped by Samsung, LG Electronics and dozens of other producers, Android runs about 84% of smartphones. That splinters the pool of profits, with many vendors losing money in a crowded market, market researcher Strategy Analytics said in October.
Own ‘action’
While Apple only has 12.3% of the market, the Cupertino, California-based company’s ownership of its operating system gives it greater control of every stage and a slice of each transaction.
“The value of an operating system is like intellectual property, you get a piece of the action regardless of the minor changes and you get to set the rules of the game,” Tom Kang, research director at Hong Kong-based Counterpoint Technology Market Research, said by e-mail.
“It’s much preferable for a giant like Samsung to be able to steer its own fate.”
Google and Apple typically receive about 30% of every application, song or movie purchased to run on their operating systems.
Google’s “other” revenue, which includes the mobile Play store as well as Chromecast hardware, was $1.84bn in the September quarter. In the same period, Apple had sales of $4.6bn for iTunes, software and services.
By using its scale in consumer electronics and No. 1 position in TV shipments, Samsung could use the unveiling of Tizen sets to create a new standard for the industry. Samsung’s TV shipments may decline to 48 million units this year from 50 million last year, Daishin Securities estimated in December.
Tizen delays
Building the TV business around Tizen will help create “a much more intelligent and integrated system,” Won Jin Lee, executive vice president at Samsung Electronics, said in a January 1 press release.
Samsung’s initial forays into Tizen haven’t developed a breakout hit. Its first phone using Tizen was more than a year behind schedule. The wristwatches Gear 2 and Gear 2 Neo were released in April, and both are compatible with many of Samsung’s Galaxy phones.
The company should improve its future competitiveness by pushing ahead with initiatives for its “smart home” and “smart health” businesses, co-Chief Executive Officer Kwon Oh Hyun told employees in a January 2 message.
Samsung will be the biggest exhibitor of consumer electronics at the Las Vegas show, displaying TVs, tablet computers, smartphones, printers and cameras. The company will show off its Galaxy Note Edge phones with a wraparound screen, its virtual-reality headset and audio products.
