Samsung’s first-quarter profit dropped by 60% as the smartphone business cools. But Samsung will be fine – it has a solid strategy it has been executing for decades: Double Play Strategy.
For Samsung, provided Apple and others continue to place orders for chips, it would be fine irrespective of what happens in its mobile phone business.. But having the Galaxy series ensures that Samsung does not have to secure external orders before innovating in the chip business which remains hugely profitable.
Yes, provided the chip business has an internal customer (the mobile device unit, the oasis in my strategy), Samsung will continue to commit resources as the oasis has removed most of the risks in investing billions of dollars to build new factories in the chip business. Yes, the mobile device unit (the oasis) makes the chip business better by being a “reliable customer”, irrespective of whatever happens externally. That is the heart of the one oasis and the center of Double Play Strategy in business.
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For Amazon’s ecommerce, there is the AWS, for Alibaba Group’s group ecommerce marketplace, there is Alipay. You may think they are making losses in specific sectors when in reality the losses help to win market shares which enable huge profits in other sectors.
What is your double play strategy?
LinkedIn Comment on Feed
Comment 1:
This could mean that samsungs double play strategy, is gradually loosing its foothold by being dependent on Apples progress. Apple has realised its hardware is not as desirable and has to pivot to more services to balance its profit margins, case of the Apple card.
Samsung has not made its mobile section any better, prices of its phones looking more like mysteries rather than bids to win more customers. This year is make or break for the Apple hardware (iphone), if its a foldable phone (knife to a throat) at what price?
Todays smartphone hardware are being won by lowrange and midrange categories. Samsung can target these manufacturers and be chip suppliers for more of them,to close profit gaps.
For Samsungs sake,Apple should not suddenly wake up and say they are ditching samsung chips to improve profit
My Response: Samsung does not depend only on Apple though. It sells to other firms. Notice that Apple’s future cannot be decoupled from iPhone since most of the services still need exclusive Apple hardware to work. So, more Apple hardware remains a critical strategy for Apple future
Comment #2:
The double play strategy encourages risk taking, which in turn fosters innovation. When you realise that whatever you are bringing forth has a ‘testing ground’ for it, you are freed from major uncertainties that usually discourage experimentation.
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