On Easter Monday, traditionally the day after resurrection, LG became the latest smartphone manufacturer to quit the market. I am sure this decision was incredibly hard for the company. As recently as January its claim to be working on a rolling phone screen was taken rather too seriously by many commentators. The realty was that if it was working on anything, it was how to save face while departing the smartphone scene.
A list littered by casualties
LG joins the likes of BenQ, Motorola, Inq Mobile, Palm, Panasonic, Ericsson, Toshiba and Sanyo in formally removing itself from the market. Yet the list of companies still officially operating but on life support is almost as long. Sony (once one half of Sony Ericsson) claims to still manufacture smartphones but must be losing money in the area; Nokia’s brand is now managed by a company called HMD which markets “me too” Android devices; HTC – once the industry disruptor itself, is now a fraction of its former glory. What is it about the smartphone market that makes technology brands so keen to succeed yet so often fail? The market has all the hallmarks of a bear pit for a consumer electronics brand. The market is huge and lucrative. The route to market is complex. The risk is bigger and less predictable than other markets. The investment needed is eye watering.
The biggest bet
I vividly remember once talking with a Financial Times journalist, trying to convince him to take my new smartphone launch seriously. He asked me for evidence – even if not for publication – that demonstrated the investment the company I was representing was making in the market as evidence that he should take the story seriously. A few frantic calls to HQ later and it was clear that I would not be getting something to share with the journalist. Why not? It was not that the investment in mobile was so small to be insignificant but so big as to be eye watering and not something that could be revealed to an FT journalist. Despite the size of investment, that company still failed.
Samsung bet early and big
Such is the ubiquity of its presence in mobile now, it is hard to ever imagine Samsung as a market entrant. But back in the early 2000s it was. And it bet early and big in Europe, with innovative devices, including the first dual screen clamshell devices, huge investment in operator partnerships and massive brand sponsorships. In 2005 the company placed a huge bet by becoming the shirt sponsor of Chelsea FC – just at the point Chelsea was getting its widest global success. Yet the brand on the shirt was not initially Samsung but Samsung Mobile, speaking volumes about the company’s ambitions in the market.
Fail fast and leave the ego behind
The lesson for smartphone companies with smaller pockets than Samsung and Apple is not to allow the investment already made in the market impact reality. Very few companies make money out of smartphones – I suspect even the biggest firms see it as a brand investment and are happy wash their face in the market. The age-old business adage is a true of the smartphone market as any other – your first loss is your best loss.