Ina Fried

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With Galaxy S III, Samsung Makes the Case That One Size Does Fit All

The tug of war between handset makers and carriers is one of the oldest games in the mobile phone business.

For most of that history, at least here in the U.S., the carriers have had the largest pull. As the ones that buy the devices and are responsible for selling them to customers, carriers have traditionally been able to make sure their brand is the biggest, if not the only one, and that the phones themselves look and feel a certain way.

The iPhone has been the major exception, shipping in an Apple box, with no carrier branding and in exactly the same form no matter which operator is selling it. But other device makers are also taking note.

With the first Galaxy S phones, Samsung managed to make sure each device was tagged as “a Galaxy S smartphone,” even though each of the U.S. carriers had their own moniker, such as Fascinate, Vibrant and Captivate. With the Galaxy S II, there were still variations in design and screen size, though the Galaxy S II name was universally adopted. (Sprint did insist on appending the Epic 4G Touch to the name, giving its Galaxy S II a long name and a split personality.)

This time around, Samsung is changing all that. Each U.S. carrier is selling essentially the same Galaxy S III device. It looks the same and packs nearly identical features, with the cellphone radio being the only key variable. (The phone supports LTE networks on Sprint, Verizon and AT&T, while using HSPA+ on T-Mobile.)

Indeed, in a demo, Samsung VP Nick DiCarlo had to turn the phone over to double check which model he was holding (it was T-Mobile’s).

The carriers are able to do a little bit of customization when it comes to software, preloading their own apps. In T-Mobile’s case, for example, the Galaxy S III comes loaded with apps for the carrier’s TV service and hotspot-connection software.

There’s a variety of reasons why Samsung wants to do this — and why the carriers are willing to go along. Unifying its flagship phone allows Samsung to get more bang for its advertising buck. It also creates the kind of device that carriers hope customers will ask for by name, the way they do with the iPhone.

For Android, the move offers a chance to have a single hit phone to compete with the iPhone, something that Google, the carriers and Samsung clearly all want.

It’s a mixed bag for the carriers, though, who tend to like to have their own brands. Sprint, for example, likes to use the Evo brand for its HTC devices, and has, until the Galaxy S III, gone with the Epic brand for its high-end Samsung phones.

“We think in franchises,” Sprint’s David Owens said in an interview on Tuesday. That said, Sprint has managed to build a very powerful brand in its own right. Importantly, Samsung is backing up the launch with a big marketing campaign of its own.

“The benefit of a global platform comes if the manufacturer is really willing to get behind it with their own investment,” Owens said.

As a result, Owens said, the carrier is happy to sell the phone as is, and to go head to head with rival carriers, based on price. As it does with the iPhone, Sprint plans to market heavily around the fact that it will be the only major carrier offering unlimited data plans with the device.

Sprint, like the other carriers, is also preloading various pieces of software and services.

T-Mobile, whose Galaxy S III will be the only model not running on an LTE network, said it is confident that it can stand out, even against rivals with the combination of its rate plans, network and services.

“We’re not really worried,” says T-Mobile’s Randy Meyerson, director of product management.

DiCarlo said that its effort to offer only a single flavor of the Galaxy S III in the U.S. involved some negotiation.

“Everything in the phone busiess is a discussion, for sure,” DiCarlo said.

Many of these branding issues are particular to the U.S. market, where most cellphones are bought by carriers and then sold to customers. As a result, carriers are powerful links in the chain, often capable of dictating how a phone will be designed, named, packaged and priced.

In many other countries, phones are sold directly to customers, either with or without an operator subsidy. In those places, the device maker’s brand has long ruled the day when it comes to high-end devices, though carriers like Orange have increasingly been targeting the mid-tier and low end with phones built for it and carrying its name alongside, or instead of, that of the hardware maker.

Several carriers have said their preference is to have several strong players in the market, hitting a variety of price points.

These days, the smartphone market is largely a two-stable race between Android and the iPhone. But where Apple’s strength is consolidated with the iPhone, Google’s power has been spread among dozens of different models from a wide range of big-name and lesser-known phone makers.

Samsung is clearly the largest player in the Android camp, though it also makes devices running Windows Phone and its homegrown Bada software. Combined, Apple and Samsung account for 99 percent of the industry’s profits, and a growing share of the sales figures, as well.

Canaccord Genuity technology analyst Michael Walkley predicted this week that Samsung and Apple will account for roughly half of smartphone unit sales this year and next.

Expectations for the Galaxy S III are high. Best Buy started taking orders for the phone on Tuesday, and said it has seen a strong initial response.

“The Samsung Galaxy S III is going to be one of the biggest phone launches of the year and we have already seen excitement from our customers,” Best Buy merchandising VP Scott Anderson said in an email.


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