In a reality not especially far from our own, you could easily imagine Samsung just shared a significant message with Galaxy users worldwide, and that message might be that they should start to use Apple Music on their Android smartphones. It’s yet more proof that when it comes to selling services Samsung hasn't yet become an also ran, let alone a competitor.
No free Milk
Apple's heavily subsidized marketing-driven foe, Samsung, has announced the closure of it's Apple Music-competing Milk Streaming Music service in the U.S., just two years after launching it with fanfare.
“Samsung is sun setting its Samsung Milk Music service in the United States on September 22, 2016," the company said in a press release. "We have made the strategic decision to invest in a partner model focused on seamlessly integrating the best music services available today into our family of Galaxy devices. We believe that working with partners will accelerate innovation, enhance device sales and provide amazing new experiences for our customers.”
Which all sounds quite lovely until you figure out what it really means. Sure, it doesn't mean it is pressing customers to use Apple Music (though I'm sure many will), but Spotify, Pandora and others will benefit from any move to integrate their services into Samsung’s phones (if they can convince Android users to pay for them, that is).
Samsung has failed
What people aren't saying is something much bigger: While Apple succeeds in building a platform ecosystem capable of driving a services income of almost one billion dollars a day -- a day -- Samsung is earning no significant sum whatsoever from services provision to its installed base.
Instead, Samsung is ceding that income to "partners," even while it has no real control of the Google-provided Android platform its phones are built on. Not only this, but in order to build its market share Samsung had to sour its relationship with its biggest customer (Apple), embroil itself in costly court cases, and while the raw numbers show it has built a device market lead much of that lead is based on sale of lower cost, heavily subsidized devices. In other words, the devices ship but the profits don’t justify the effort involved.
Services are essential as hardware sales slow
That it has scaled up its platform ecosystem with sales of cheap phones is something I could live with if the company was benefiting in another way, but it hasn't -- and the fact that it is abandoning Milk tells us everything that is wrong with the Samsung business plan. The company is nothing more than a box shifter -- and in the current market in which hardware sales are slowing, if Samsung can't maintain hardware sales it will have no business left. Apple meanwhile has been preparing for this tough new environment. Take a look at these charts to see just how well it has been managed for this.
I know there will be many who don’t like me saying this, but it’s an unavoidable truth – Samsung’s closure of Milk shows it has no significant services to offer with which to maintain its long term smartphone business. Apple holds a big advantage in this regard, which is why in the long term its smartphone business will be more sustainable. Also Apple Music in iOS 10 is going to be so much better -- I wonder what Android users can look forward too?
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