Samsung Bets Future Growth on Flexible OLEDs…and Bixby?

Samsung reported excellent results in 2017, with strong growth in its foundry and display businesses. These sales outweighed dips elsewhere in the company’s overall product portfolio, and a decline in consumer electronics spending. The company’s total sales grew 1.19x year-on-year, an impressive result for the company’s still relatively young foundry business compared with firms that’ve been in the market longer.

What’s a little surprising is the technologies Samsung thinks will keep it doing well through 2018.

Samsung will try to improve profitability by increasing the high-end LCD portion of screens and enhancing productivity of flexible OLED panels, among other measures…

As for the Mobile business, Samsung will continue its efforts to differentiate its smartphones by adopting cutting-edge technologies, such as foldable OLED displays. It will also drive forward new businesses related to AI/IoT by strengthening the ecosystem based on Bixby and building on Samsung’s 5G technology.

It’s not clear if Samsung is well-positioned to make a splash in either market, though for very different reasons. Flexible OLEDs are the type of thing everyone thinks they want, without thinking about tradeoffs. And there will be tradeoffs, at least with first generation products. Like regular OLEDs, expect flexible OLEDs to be a slow-growth business, not a meteoric rise.

Bixby is a different story. Samsung’s AI effort has been roundly panned by just about everyone. As the Verge notes, Bixby feels “more like a return of Samsung’s old ways.” Nobody wanted a dedicated Bixby button on the side of the Galaxy S8, at least not when the service was as poor as Samsung’s was at launch and in the months that followed.

Furthermore, it’s not at all clear how Bixby generates profits for Samsung, unless those profits are being driven entirely by the sale of user data. Is anyone going to buy an all-Samsung home for the joy of running Bixby across multiple products, in the faint hope that this will create some sort of useful synergy? Doubtful. The kind of integrated AI assistant that could actually run on top of many different platforms and serve the best interests of consumers is more or less the opposite of what the individual companies creating these products want. For Amazon, Microsoft, Apple, and Samsung, the entire point of a digital assistant, ultimately, is to lock you into an ecosystem. Any secondary device-level or platform-level compatibility is ultimately towards this purpose.

Also, fun fact: When we talk about the DRAM shortage currently making RAM almost impossible to afford, we’re mostly talking about Samsung. Of the three RAM manufacturers that are left, Micron + SK Hynix’s total DRAM sales are only slightly larger than Samsung’s. Samsung’s global high revenue is everyone else’s pain point. The company is facing some foundry headwinds this year as Qualcomm moves some of its production back over to TSMC, which may be part of why it’s keeping RAM scarce, to offset the loss. But either way, the company is making a great deal of money in the market as a result of these shortages.

Continue reading