Given Samsung's current competitive disadvantage in the smart device market, the South Korean company learned nothing from Dell or Hewlett-Packard. The two former high-flying PC assemblers ultimately achieved inferior financial performance as customers kept moving toward lower price PCs. The lessons from Dell and H-P seem lost to Samsung's management. As Katie Benner discusses, Samsung wants to double down on HP's mistakes. The money management misstep:
Samsung has reportedly been in talks to buy BlackBerry, apparently because it's enthralled with the mobile operator's patents and a secure network that manages e-mail traffic for the U.S. government, military agencies, and, of course, major corporate customers.
The BlackBerry offer stands at $7.5 billion, and should increase as other companies such as Google, Motorola, etc. start to kick the tires. The parallel is not perfect. As the saying goes, history does not repeat itself; it merely rhymes.
In this case, the rhyme stems from HP's ill-fated purchase of the Palm OS for $1.2 billion in 2010.
In the smart device market, Hewlett-Packard found itself struggling to extend its brand from the PC market to the smart device market. The company needed the extension to improve it financial performance as HP's PC sales volume continued to slide and its PC operating profits shrunk.
Hewlett-Packard tried selling handsets with the Microsoft CE operating system and licensed the iPod for resale. The Palm purchase marked the American company's effort at changing its competitive advantage.
The company acquired information and legal resources through the Palm purchase in the guise of the OS and patents. However, HP could not better allocate its organizational resource as the company could not develop a handset that met the needs of a market segment. Currently, HP is licensing webOS (nee Palm OS) to any firm willing to pay the fee including Samsung.
At one point, Samsung held the most market share among smart device manufacturers similar to how HP and Dell held top spots among PC manufacturers. HP and Dell like Samsung did not control the OS that powered its devices. All three companies watched customers buy cheaper, competing products that offered similar designs and the same OS.
The bigger threat for Samsung appears from the Internet of Things, and not from Google or Apple.The Internet of Things is about chips, operating systems, and networks. Three market offerings that Samsung lacks in its product portfolio. Given how hardware companies have struggled to reverse their fortunes (see Commodore, Dell, HP, IBM, Motorola, Nokia, etc.), Samsung's $63 billion cash will only buy it time.