Longish post so please bear with me:
All this "hardware is getting commoditized onlee" and "vertically integrated ecosystem play" and "good polished UX" all miss a central point. All of the above can explain why previously profitable companies gradually decline, but cannot explain the sudden death and upheavals of companies. Two examples come to mind:
1. Kodak and polaroid dying in a span of 4 years
2. Blockbuster dying in a span of 3 years
What happened in each of the cases?
1. People started shooting in digital cameras. That meant that film companies' sales tanked. They still had the margins mind you, their market just collapsed. Now Kodak was at the forefront of imaging, their patents are still worth a huge deal. They saw the digital revolution coming, but simply spent the time denying it "serious photographers will never shoot digital" and "digital can never match the quality of film" and "film has some inherent advantages, it is hard to make light thin digital camera sensors" etc etc. All of which was false.
2. What happened to blockbuster? Two things: (a) Emergence of DVDs meant that DVDs could be mailed out cheaply and quickly (casettes were to bulky and heavy to store, mail out and process) (b) Emergence of internet meant that customers could browse DVDs online instead of driving to a store and walking into a store. Blockbuster kept denying this trend "Netflix does not give the experience of a physical store" and "there is no human touch" etc etc.
The same happened to Nokia.
When iPhone was introduced, Nokia actually said (IIRC paraphrased) "We make sure if phone drops it is robust, lets see how FruitCo builds a robust phone" they actually said "We have better camera, GPS and 3G on our phones!!". IIRC they also said "people dont like large touch screens, they are afraid of breaking it". when android came out they said "We don't see this as a threat." and "We take it seriously but we are the ones with real phones, real phone platforms and a wealth of volume built up over years.".
http://www.engadget.com/2007/11/05/symb ... relevance/
They didnt see a fundamental shift in the industry:
1. Cell phone service cost was dropping, so people had more money to spend on devices (or in the case of US, pay the same monthly service fee, but carrier applies a part of it to phone subsidies)
2. The essence of smartphones was that it was first a laptop and then a phone. People were simply spending more time on the phone and less time on laptop/desktop for maps and email and news and music etc.
They were essentially competing with the internet and the PC -- and lost.
In mature markets all this UX and non-turd and polish and choice and ecosystem and all that give marginal benefits to competitors. Take the PC industry for example. Some buy Macs -- arguably they are better constructed with more thoughtful features right up to the power connector. But PCs sell more: They sell in more pricepoints and have better selection of games and applications. The key point is though -- both PC makers/M$ and FruitCo run profitable businesses (well, except dell). So does UX and polish and ecosystem matter all that much in the game or survival? Not really. OTOH, does identifying shift in the industry and following it matter? Absolutely. If you dont, you risk getting blown out of the water like M$ and Nokia in Mobile.
Here too execution is everything. I am sure Nokia produced its fair share of Powerpoints on where the cell phone industry was going. But they get no brownie points. Take for example -- Anybody remember UMPC? Way back in 2006 Intel said that future was all mobile and they would make power efficient mobile chips and M$ signed on to make "mobile experiences" and they came out with a nonsense like this:
After displaying nice powerpoints, Intel went on to make power hogging server class chips. Nobody can blame Intel for not seeing that Mobile was the future, they simply didnt take much interest in it. Same thing with M$. Nobody can fault them for not seeing tablets coming -- in fact Billy G was the biggest proponent. Except, they didnt do much about it. Last quarter FruitCo sold ~20 million iPads, M$ sold FruitCo's rounding error.
This is what Samsung did best. Identified an industry shift, moved their phones to the mobile OS which had the best shot of competing with the iPhone and executed well in producing phones that customers wanted. You can nitpick whether S4 has plastic back or whether Qualcomm chips are better, point is they made millions of phones at the right time, of the right kind that users wanted.
Will Samsung catch and ride the next industry shift? That is left to be seen. Will M$ iterate and catch up? That is left to be seen. They did well with XBox. They sucked with Zune, Kin and Bing.
Meanwhile, Sammy atleast went to Pakistan and has a turd while M$ and Nokia were sleeping and just suddenly woke up.
