Whaaat?

A change in leadership happened recently at Samsung, which might mean that the South Korean company will concentrate more on building software rather than hardware products.

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Some voices in the media assume that the move follows sinking hardware sales, a result of Samsung’s market share being chipped away by Apple at the premium end and Asian brands such as Xiaomi and Huawei at the lower end.

Before replacing Shin Jong-Kyun, new president Koh Dong Jin took care of the R & D department of Samsung Mobile and worked closely to develop Samsung Pay and Knox.

“Based on Koh’s career background, it suggests Samsung will put more weight on its software focus instead of hardware,” said analyst Greg Roh, according to Bloomberg.

Sources familiar with Samsung’s mobile strategies stated that the company’s potential lies more in software power and new innovations than in its hardware offerings.

Jin’s leadership is expected to orient the OEM towards better software services and products, some of which will increase the revenue by using subscription-like mechanisms.

A good example to follow is Apple’s business model. The Cupertino-based company not only earns around $200 per iPhone, but also increases its profit through iTunes, App Store and Apple Pay. In the last quarter of 2015, Apple’s software and services division banked $5 billion in revenue.

The biggest threat to Samsung is might be the competition on the lower end though.

Analysts point out that new players entered local markets with a fair degree of success, and it is safer for Samsung to retreat from these niches and focus on places that could give it an edge again.

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