Portfolio Pare-Down Procedures

Samsung and Sony Streamline

Paring_lSamsung’s device portfolio is currently a dictionary of brands and sub-brands: Ace, Active, Alpha, Beam, Core, Edge, Galaxy, Grand, Mini, Mega, Note, Prime, Star and Zoom. There are numbers and letters and spaces and some orderly combinations of most of these, but it’s not easy for the average consumer to discern one model from the next. It could lead to overwhelming complexity in the already crowded market when simplicity would be a better fit.

Broad device portfolios also mean internal consequences for device makers, creating complications that can lead to painful bureaucracy and inter-group abrasion. Being big and broad could mean a mile wide and an inch deep.

It’s perhaps no surprise, then, that Samsung and Sony have decided to pare down their device portfolios given market share losses among growing global competition. Model cutbacks might appear counter-intuitive given growing volumes, but tighter portfolios should allow each company to concentrate on flagship and core products, build brands, spread overhead across devices, improve margins and send a message of clarity to the market.

Samsung said that it would cut the number of handset models by up to 30% during 2015, which would still leave the company with a wide portfolio. The company introduced about 50 smartphone models during 2014, a superfluous number compared with the streamlined portfolios of brands like Apple. Samsung should be able to better defend its market share by concentrating on the quality of the build and experience of fewer devices, but it’s certainly no miracle cure.

Sony isn’t just cutting back on its model portfolio, but also its total mobile ambitions. Hiroki Totoki, head of Sony’s mobile unit, said the company no longer aims to be the number-three global smartphone maker behind Samsung and Apple, but rather just wants to make money. The company will do this by culling the number of lower-end models and concentrating on flagship and iconic products. It’s a realistic and refreshing take on its situation.

Snowflake segmentation models — where many models are similar, but now two are exactly the same — have proved difficult to manage over the years. There isn’t necessarily a direct correlation to the size of the market and the demand for different model types. De facto device standards are being set by consumers, operators and developers. It’s ironic that the market is able to concentrate better as it’s grown to ship more than a billion units annually. Every price band is being addressed, but the real money is in making fewer models. Throwing many models against the wall and hoping one will stick is a segmentation design that won’t stick around.