Has Samsung's Tizen Become a Money Pit?

Samsung can't get its Tizen phone off the ground.

Jul 14, 2014 at 6:45PM

Samsung (NASDAQOTH:SSNLF) was set to launch its first phone running Tizen last week until it faced yet another set back. After a cancelled launch in Japan earlier this year, Samsung set its sights on Russia with the Samsung Z -- a high-end Tizen-based smartphone. The Samsung Z is now set to launch later this year.

Tizen, an alternative mobile OS, is Samsung's best opportunity to reduce its reliance on Google (NASDAQ:GOOG) (NASDAQ:GOOGL). More importantly, it's a path for Samsung to differentiate its products from other Android phone makers.

But Samsung wants to make sure it's differentiated in the right way -- a positive way. Otherwise, the Samsung Z and its sequels may never get off the ground.

What kept the Z grounded this time?
In Japan, Samsung faced opposition from NTT DoCoMo, which shelved plans for the Tizen phone based on the competitive market. Last week, Samsung delayed the launch of the Z itself.

The Korean electronics maker said in a statement, "the smartphone will appear on the Russian market later, when we can offer our users a fullest portfolio of applications." In other words, the app store is holding it back from being competitive.

Samsung's pitch to developers is quite uninspiring: "The most obvious advantage [of developing for the Tizen phone] is that you'll be at the top in a half empty store on a decent premium device."

There are a couple problems with that pitch. First, if every developer heeded it, the store would no longer be half empty. Second, Samsung isn't selling anybody on the hardware.

At least one other high profile smartphone OEM is producing a phone with an Android fork, and it offers developers unique hardware to play with and take advantage of. Samsung is offering developers a "decent" device to develop on with the only advantage being that Samsung is going to market the device.

What problem does Tizen solve?
Tizen doesn't make things easier for anybody except Samsung.

Samsung has had its issues with Google in the past, but agreed to terms earlier this year to cross-license patents with the search giant. The terms stipulated that Samsung tone down its TouchWiz UI and feature Google's apps more prominently. Still, the terms are less than optimal for Samsung, which would rather feature its own differentiated design and apps.

But Tizen doesn't make things any easier for developers. If it did, Samsung wouldn't have had to entice developers with $4 million in contest money. Developers already have strong markets to make apps for with Android and iOS. There's nothing Tizen can add for them besides being "at the top in a half empty store." That's like having the number one toy at KB Toys in 2008 -- nobody's shopping there.

For users, Tizen doesn't seem to solve any problems. Aside from the obvious dearth of apps, Google's APIs -- most notably, Maps -- will be completely absent. While there are replacements, they're inferior products. Even if the hardware is great, many users will opt for the best user experience over the best hardware specs. Samsung cannot offer that with Tizen.

Not a complete waste
Although we're still waiting for a Tizen phone, Samsung has already released two smartwatch models running Tizen: the Gear 2 and Gear 2 Neo. Samsung was early to the market with its smartwatches, and has the advantage of its huge smartphone base to help sell the wrist computers. As a result, the Gear line has a strong market share.

Google has responded with Android Wear, a version of Android specifically designed for smartwatches. True to form, Samsung has elected to use Google's OS as well as Tizen and its own specialized Android OS for wearables in its spray and pray strategy for capturing market share. Still, Tizen is the OS in its flagship model.

If Samsung is able to maintain market share of the wearable market as competition increases and convert more users to its flagship smartwatch running Tizen, it may still have a shot at making the OS work. Until then, it will have a hard time attracting developers and consumers.

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!

Adam Levy owns shares of Apple. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers