Samsung Z: Failure to Launch in Russia

Will Samsung ever actually launch its Tizen-based Z? Probably not.

Jul 13, 2014 at 9:00AM

Samsung (NASDAQOTH:SSNLF), in a bid to reduce its reliance on Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Android operating system, has been making a pretty big deal about phones based on an operating system known as Tizen. Though Samsung doesn't own Tizen, it is one of the key companies that helps drive the technical direction of the platform. However, it seems that despite this support, Samsung yet again delayed the launch of its first Tizen-based phone.

The Samsung Z is MIA
Samsung's first Tizen phone – the Samsung Z – was slated to launch in Russia this week. However, it seems that instead of actually launching the device, Samsung simply put out a statement claiming that the phone would come at a later date when it could offer a more robust suite of applications.

Now, this is hardly a surprise as Google's Android is a very rich, very vibrant platform that has benefited from years of work (and a very large total addressable market). In contrast, Tizen seems to be a platform that many companies support in spirit, but when it comes to laying down app development dollars as well as support in mobile devices, the picture is much bleaker.

Why should software developers support Tizen?
If you look at this from the perspective of an application developer, it's already tough competing in a market where competition is extremely fierce and new features need to be added on a continuous basis to keep current. Why would a developer spend valuable and limited resources on a very niche platform with minimal market share when those resources could be better served improving the iOS and/or Android versions of that app?

It's tough for hardware vendors, too
Further, from a hardware vendor's perspective, there are also clear risks in trying to go too broadly with Tizen. If a hardware vendor decides to go Tizen-only, then that vendor is essentially offering phones with limited application ecosystems – a virtual death sentence to its sales.

If that hardware vendor offers a mix of both, then managing inventories of the Android-based SKUs and the Tizen-based SKUs becomes difficult. To mitigate risk, the Tizen-based phones end up being built in limited quantities and marketed with fairly limited resources because doing anything but that is extremely risky and has a negligible payoff.

What happens to the Samsung Z?
Samsung claims that its Z will launch at a later date when the included software is more robust, but being ever-skeptical, I wouldn't actually count on Samsung ever releasing the device.

Smartphones have relatively short life-cycles and at this point, the Z is getting stale. What was a reasonable high-midrange phone in mid-2014 suddenly becomes a low-midrange phone by the end of 2014/early 2015 -- meaning that selling price and margins shrink. 

Foolish bottom line
By the time Samsung can actually launch this phone with an adequate suite of applications, it just won't make economic sense to actually launch it. And, given that Samsung isn't in the habit of making poor financial decisions, the odds are good that the Samsung Z is swept quietly under the rug, right along with the notion that Tizen has any reasonable chance of success as a mobile computing platform.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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