What is the gap between domestic mobile phone manufacturers and Samsung?

Market share and profit amount PK

At the end of April, Samsung Electronics' first quarter 2015 financial report showed that Samsung Electronics' consolidated operating income in the first quarter was 47.12 trillion won and operating profit was 5.98 trillion won (about RMB 34.7 billion). The operating income in the first quarter decreased by about 11% compared with the previous quarter (52.73 trillion won), but the operating profit increased by about 700 billion won compared with the previous quarter (5.29 trillion won). Except for the CE department, the operating profits of all other business departments have improved, and the operating profit margin has increased from 10% in the previous quarter to 12.7%. This was achieved without calculating the sales revenue of S6.

If we compare profits, taking the domestic mobile phone manufacturer Lenovo as an example, this company ranked fifth on the market share list released by TrendForce, its net profit in Q4 last year was US$253 million, which also included the "big head" PC business.

Globally, according to TrendForce's mobile phone industry data report for the first quarter of 2015, Samsung ranked first with 27.8%, up 3 percentage points from 24.7% in Q4 2014. Apple followed closely behind with 19.9%, nearly 13 percentage points more than the third-place Huawei , and Lenovo accounted for 6%.

It is worth noting that the high-end mobile phone market is still firmly occupied by Apple and Samsung.

Innovation ability PK

When the homogeneity of mobile phones in the Android market became increasingly serious and innovation was weak, Samsung Galaxy S6 Edge tried to change this stagnant situation. Galaxy S6 Edge pioneered the dual-curved side screen design on smartphones, which was a real innovation.

The S6Edge uses a SuperAMOLED curved screen. In terms of production technology, the screen is first bent on both sides, installed on the GalaxyEdge, and then covered with a layer of glass. Samsung uses a double-curved side screen, which is the most difficult part in the production process. In order to improve the resolution, it is not only necessary to make electronic circuits on the double-curved side screen, but also to add more than 3.6 million pixels, and then paste various films to complete it. However, because of this technology, when consumers operate the phone, the touch screen is more sensitive and the grip is more comfortable.

This is the result of Samsung's continuous progress in flexible screen technology. In October 2013, Samsung became the first company in the world to mass-produce curved displays, and then successfully broke the stereotype that smartphone screens can only be flat with the Samsung Note 4 Edge.

Samsung Display revealed that Samsung's various forms of borderless flexible screens will be used in the development of new markets for next-generation wearable devices such as fitness and fashion.

Unlike many global brands, Samsung has strong vertical industry chain integration capabilities. As the leader in the semiconductor industry, Samsung has mastered the core technologies of important mobile phone components such as motherboards, chips, and flash memory, and has become a chip supplier for many electronics giants such as Apple. In addition, Samsung has a very strong voice in the fields of screens, batteries and other components. From strong products to strong components, Samsung has been labeled the king of hardware.

In the past few years, Samsung's strength in software cannot be underestimated.

In recent years, Samsung has increasingly focused on investing in "soft power". Globally, about 40,000 Samsung employees are engaged in software development, accounting for 57% of its 70,000 R&D personnel. Samsung also invests through the Main Investment Strategy and Innovation Center (SSIC) and the Open Innovation Center (OIC) to utilize talents in Silicon Valley.

In 2012, Samsung Software Center was established in South Korea. As a top global R&D institution, this center has been committed to the research and development of software projects with great influence. In addition, Samsung Media Solution Center (MSC) focuses on providing rich content and services for Samsung devices and several key enterprise projects such as cloud computing, big data, smart home, smart health, etc.; KNOX, an enterprise-level mobile security solution, has been rapidly adopted since its launch in 2013, with more than 3 million active users.

In comparison, the innovation capabilities of domestic mobile phone manufacturers are still in their infancy.

R&D investment PK

What determines innovation capability is investment in R&D. The number of patents held and the number of patents increased are important indicators of technological strength and a prerequisite for maintaining product innovation.

Public data shows that Samsung is currently the second largest patent holder in the United States, second only to IBM, with more than 33,800 patents. Samsung has made great gains in patents throughout 2014. According to the statistics of the US Patent and Trademark Office (USPTO) on the authorized patents in 2014, IBM ranked first in the list of major patent holders in 2014, with 7,534 authorized patents; Samsung ranked second with 4,952 authorized patents; Canon, Sony and Microsoft ranked third to fifth.

Samsung's accumulation in patent acquisition means that new competitive capabilities are being formed. Data shows that in recent years, Samsung's patent applications are distributed in mobile phones, virtual reality, semiconductor materials and processes, SM cards, medical equipment, home automation, alternative fuel vehicles, etc., and the number of patent applications in some fields ranks first in the world. Holding these patents will undoubtedly become Samsung's main bargaining chip to seize the competitive high ground in the future.

The number of patents approved is a result of a number of factors, including the company's R&D investment and corporate culture. According to a PwC survey, Samsung is the technology company with the highest R&D investment in the IT industry, and ranks second only to Volkswagen among all companies in the world.

Samsung's R&D spending has increased by 27% since 2010, and the company's R&D staff has expanded to more than 60,000 people in 2014. Samsung spent 6.4% of its revenue (about $13.4 billion) on R&D in 2014. It is clear that the company is planning to accelerate its future growth by investing in new technologies.

Compared with Samsung's huge R&D investment, domestic mobile phone manufacturers' investment capacity and willingness need to be strengthened.

Technological innovation determines the future

The domestic mobile phone industry has developed rapidly in the past two years. The cost advantage makes domestic mobile phones more down-to-earth than international brands in the price war. In particular, domestic mobile phones are launching the most fierce offensive against Apple and Samsung with their excellent cost performance.

However, regardless of sales, profit margins, and globalization, which are indicators in which domestic mobile phones can easily lose, from the perspective of technological innovation, the gap between domestic mobile phones and international brand mobile phones still exists.

For example, Samsung has a supply chain that influences the entire market industry in terms of screens, processors, memory, batteries, etc., and its voice in chips is getting stronger and stronger. In contrast, domestic mobile phone manufacturers can only play the role of "assembly factories". In terms of international expansion, in addition to the lack of patents, the inability to adapt to the international market and the lack of brand bargaining power have all restricted the "export" of domestic mobile phones.

To occupy the high-end market, innovative technologies are needed. Even if followers make a lot of publicity, they can only enter the field with low threshold or low technical content. For those emerging technologies with high technical content, domestic mobile phone manufacturers obviously still have a long way to go.

In the view of industry insiders, behind the "false prosperity", domestic mobile phone manufacturers still need to be down-to-earth, make their own products well, and find innovative functions to provide to users. Only when their comprehensive strength increases will they have the capital to challenge international brands.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.