When I mused last week that hardware is hard, I didn’t even mention the difficulty of surviving in that peskiest and most profitable segment of the hardware business: smartphones. It’s worth pausing to ponder the challenge, given that two new players, Huawei and Google, have set their sights on the high end of the U.S. Market.
First, consider for a moment how many have stumbled. Samsung (SSNLF) is all but imploding before our eyes. First, it lost its commanding lead in China. Then its Galaxy Note 7 phones began blowing up in the U.S. Now it is recalling its washing machines. Motorola as we knew it no longer exists. Nokia is a fraction of its former self. Microsoft (MSFT) tried and failed in phones for years. Apple (AAPL), still dominant in profits, is moving in reverse. Even the newbies can’t keep it together, as Coins2Day’s Scott Cendrowski ably illustrated in his summertime feature on China’s Xiaomi.
The market is so big for smartphones, though, that new players can’t seem to help themselves from trying.
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Google (GOOG) has taken many runs at making a phone, from the Nexus it outsourced to several manufacturers to the Project Ara modular phone that never made it to market. Now it is trying again with its high-end Pixel, which it is making under its own brand and selling through Verizon, Best Buy, and its own online store. Next, the surging Chinese manufacturer Huawei (HUAWEI) plans a pricey phone for the U.S. According to The Wall Street Journal, Huawei plans to sidestep wireless carriers altogether as a distribution channel, instead relying on e-commerce sites. Not even Apple tried that.
If hardware is hard, making small but powerful computers in a veritable commercial graveyard is really hard. Consumers will no doubt be the biggest winners.
Please have a restful day today; tomorrow is going to be a long one.