Samsung’s Trojan Mule Strategy…And 7 Ways To Fix It

Samsung just launched its Note 9 smartphone. Like all its predecessors and siblings, it’s a mule.

Over the years, I’ve consulted to Samsung, assessed its mobile strategy, and owned/rooted its Galaxy S2, S5 and S9+ phones. In 2011, I noticed a light sprinkling of Samsung apps on my Galaxy S2. By the time I reviewed the S5, it was a full marinade. Except, I was inside the pot!! It turns out, I was drafted into the slowest Trojan Horse attack in history, aka the Trojan Mule Strategy.

This is the story of what Samsung is doing (wrong), companies that have done it better, and seven ways Samsung could revive its gimpy mule.

“I’ll Just Watch”

For nearly a decade, Samsung used the official version of Android (with licensed Google apps) as a launchpad for its own, similar apps. In the process, annoying and confusing consumers with duplicate functions and settings. Good design is supposed to remove friction, not stuff it in, like a piñata full of nail files. (To be fair, some customers love nail file piñatas.)

But why would Samsung use customers as pawns – on devices they paid for – in some lethargic turf war between frenemies?

It’s clear Samsung (slowly and fearfully) aspires to control its own ecosystem – and destiny. Likely starting with a Google-free version of Android, as Amazon did with Kindle. Then, siphoning users from Google’s apps to its house brand. (Samsung also has Tizen OS for TV’s and other smart devices.)

Samsung knows the future is services. That’s where all profits and customer loyalty live. Software is the way there.

But every Samsung app is a needy Ex, begging me to dump my girlfriend:

Please sign up for my health app! I just want to hear your heart beat!

I’ll wear this nightie if you show me all your photos!

Pleeeeeeezzzzzeee connect me to your Gmail!!!!!

Samsung lures us with sexy hardware, dresses up its apps all pretty, then watches most people shack up with Google. Instead of throwing an awesome orgy, Samsung wound up in a cruel cuckold.

That’s not how ‘the mule’ is supposed to work!

A Brief & Unsatisfying History of The Trojan Mule Strategy

Samsung is hardly the first to use the Trojan Mule. There’s lots to learn from others who’ve done it better.

The Trojan Mule strategy has five steps:

  1. Stock your shelves with major brands to attract customers (in this case, Google apps)
  2. Create proprietary versions of what’s most popular and profitable
  3. Place your clones next to their brand name counterparts. Underprice and promote them to encourage sampling, familiarity and habituation. (You’ll have more margin to play with compared to paying brand premiums.)
  4. Inch your clones upmarket (improve labels, formulations, quality, and raise prices to just below the name brands)
  5. Max out substitution of branded sales with proprietary ones and optimize procurement

This strategy takes time, often years, but maximizes profitability, improves bargaining power with suppliers, reduces reliance on third parties, and wins you control over your own destiny.

5 Examples of the Trojan Mule Strategy

  1. Amazon launched its own Essentials clothing line and AmazonBasics electronics accessories. Of course, the company has access to huge reams of data from brands and marketplace sellers, who rely on Amazon distribution but may eventually compete with it, if their products become too popular.
  2. Netflix rented millions of studio films and TV shows for over a decade. It knows so much about our preferences that its original productions target categories, creators, and audiences it knows will sell – and have great margins, like stand-up comedy specials.
  3. Supermarkets and drug store chains have used this strategy for so long that we don’t even question the clone standing next to the Head & Shoulders bottle with a “Compare at $1.50 less” tag. Trader Joe’s entire business model dispensed with the pretense and became THE private label store.
  4. Macy’s (and other department stores) did this with Alfani and other house brands. Like Trader Joe’s, H&M, Forever 21 and Sephora didn’t bother with step 1. The store is the brand.
  5. Facebook is the granddaddy of all Trojan mules. For a decade, it encouraged major publishers, brands and celebrities to promote their pages, post articles, use Facebook to drive traffic, use Facebook login, display tracker-laced sharing buttons. Basically, build Facebook’s brand with their own. Then, Facebook pulled the rug. Everything went proprietary. Try sharing a YouTube video. No one will see that turkey fly. Today, most pages are pay-to-play, if you want your posts seen. Facebook executives pretty much admit publishers no longer matter. They can kiss the mule they rode in, goodbye.

Ironically, as our lives become more digital, it’s way easier to launch physical products than digital ones. In meatspace, there’s no shortage of outsourced manufacturers or food co-packers. Finding great developers and designers and deploying successful digital products is no easy feat. Most who try, fail.

Should Samsung bravely let go of Google’s security blanket?

Samsung’s lumbering mule means the company knows how lonely and treacherous letting go can be. Billions in sales are at stake.

Like a bad marriage, maybe Samsung is waiting for its partner to issue an ultimatum – or initiate the breakup. Or, maybe organizational inertia is preserving status quo…until it can’t.

Galaxy S9/S9+ sales are stagnant.

Apple is eating up high end customers and 80% of smartphone profits. Not to mention Apple’s surging cloud services revenue.

Google skims all the cream on Android.

The app boom is over. Only a handful of mobile services make bank.

 

In fact, all smartphone innovation has plateaued, slowing upgrades. That’s why Apple spends more time removing jacks and emasculating its $30 cables than innovating blockbuster features.

For now, Samsung’s hardware and screens are still superior, despite the bloat. (It’s why I still bought the S9+ but used Package Disabler to kill the clones.) But hardware is a race to the bottom. Chinese manufacturers can win that marathon every day. It’s how they conquered upstarts like Fitbit, GoPro and Jawbone. Direct competitors – OnePlus, Huawei, Motorola – and Google’s Pixel – are nearly at parity or inching ahead – without tangling customers in on-device warfare.

Luckily, many Samsung apps are at – or near – parity with Google. Samsung can acquire the rest. (See my quality ranking of various Samsung doppelgangers here.)

Samsung has the resources to finance big moves, including profits from supplying iPhone parts. It’s time to unleash the Mule Army…before its soldiers go senile.

Or, it needs an entirely new plan…

Seven Better Opportunities

I think the Trojan Mule is a terrible strategy for Samsung. It needs to be terminated with extreme prejudice.

Not only is antagonizing Google and your customers a bad idea, but the underlying premise is pitiful and misguided. It’s like the 90’s movie Bound, where a jealous woman slowly takes over her roommate’s identity. A Trojan Mule strategy projects weakness. Your DNA doesn’t change when you put on makeup and a wig. Everyone knows Samsung will never defeat superior pure plays like Google (data & software services) or Apple (a luxury, experiential mating call).

Strength comes from forging your own unique identity. One that’s true to who you are as a company (or individual).

So who are you, Samsung? What do you stand for? 

Without doing our normal Context work to find out, I’ll postulate seven specific opportunity areas, linked to Samsung’s advantages.

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Samsung Advantage (top=strongest)

Opportunity

Best in class hardware1.      Protector. security is the biggest plague in tech today. Breaches are everywhere. Everything from finances to personal safety are at risk. Samsung has multiple biometric, chip-based, and display technologies that can give them a serious advantage in protecting data and offering various security services. These can be acquisitions or partnerships. Samsung devices can be the vault no one can break into.

2.      Optimizer. Android can be complicated and intimidating. Samsung has an “Easy” mode, but it can do so much more. For example, it can set up or buy an MVNO and strike deals with global providers to offer universal coverage for one price (not unlike Project-Fi), roaming across networks. Link it to hardware switching capabilities so others can’t easily replicate the model.

3.      Hacker. Many Android users are a different breed from iPhone users. Many of us love to customize, hack, disassemble, root, etc. Let us. Could mean modular devices with upgradeable parts (like Project Ara), but start with batteries! Or supporting hacker communities that let us install custom ROMS and experimental features. Hell, buy the XDA community the way Microsoft did Github! Just make sure everyone signs releases!

4.      Executive. Samsung Dex is a good start. It allows you to turn your phone into a full-fledged computer with a simple dock. But what’s the use case? If Samsung can turn companies into single-device operations, it can eliminate a whole category of computing costs. Integration with major corporate platforms, like Salesforce, Microsoft and Oracle will be key.

Strong asset (app or platform)5.      Immortal. Samsung health is a good app, but there’s no concerted business model around it. This could be a juggernaut once connected to an ecosystem of compatible hardware that’s distributed simply and with the superior service. Much can be covered by health plans. As more of the population ages, remote health will be huge – and mental health and wellness aren’t far behind.

6.      Gamer. They are rumored to be making a gaming phone – a full 7.5 years after I proposed it as the best way to save Windows Phone. Today, the market is much tougher with Android and iOS in control. That means tripling down on e-Sports. It is the future. Live streaming and real-world events are already off-the-charts popular. Hundreds of colleges are sanctioning it and offering scholarships. Now is the time to do with phones and e-Sports what Google did with Chromebooks in education. Samsung Gear is a good start.

Secondary asset + market opportunity 7.      Butler. Since Jet.com’s Mark Lore took over Walmart’s e-commerce, the company has aggressively acquired e-commerce brands like Bonobos and Modcloth and launched new services, like store-to-home delivery. Walmart is hungry and could be Samsung’s tentacle into real-world commerce. It could also put the fledgling Bixby voice assistant on the map and make Walmart a more viable Amazon competitor. I’d focus on some of the premium brands first, given Samsung’s premium positioning.

8.      Entertainer. Sorry, time ran out.

 

Samsung must THINK BIG! Exclusives, acquisitions, strange bedfellows. Most important, these must be seamless experiences. No more competing interfaces. Remove steps, don’t add them.

Rate the Clones!

Finally, here’s my rating of which Samsung duplicate apps are (*) nearly competitive w/Google version or (**) equal or better, sign in to the site (free)

  1. **Gallery
  2. **Browser
  3. **Calendar
  4. **Find my #mobile
  5. *Launcher
  6. *Mail
  7. *VR (still very early in this category)
  8. Cloud backup (totally superfluous without a strategy)
  9. Bixby voice assistant
  10. App store
  11. Speech-to-text
  12. S-Pay
  13. Gaming

If you need our help innovating, drop us a line at ideas(at)ideafaktory.com.

 

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