Along with the launch of its iPhone 6/6 Plus phones, Apple (AAPL 1.45%) introduced its very own contactless mobile payment system known as Apple Pay. Unsurprisingly, with the launch of its own Galaxy S6 smartphones, Apple rival Samsung (NASDAQOTH: SSNLF) released its own, very creatively named mobile payment system known as Samsung Pay.
Also, it would seem that Apple Pay is utterly crushing Samsung Pay.
Billions vs. just hundreds of millions
Samsung recently bragged that its Samsung Pay service is now up to 5 million users and they have spent "over $500 million" over the last six months.
In sharp contrast to this, Apple CEO Tim Cook recently said on the company's January earnings call that customers "have spent billions of dollars with Apple Pay." Furthermore, Cook said that during the second half of 2015, the iDevice maker saw "a significant acceleration in usage," claiming that the rate of growth during the second half was 10 times greater than that in the first half of the year.
Note that these results were recorded before Apple introduced Apple Pay to the China market earlier this month. Samsung, too, plans to roll out Samsung Pay in China next month, but I have a strong suspicion that Apple Pay's growth will only continue to wildly outpace that of Samsung Pay in the coming months and years.
Why is Samsung even bothering?
According to one analyst cited in a Wall Street Journal column, Samsung is trying to build out its software and services in order to lock customers in to the Samsung ecosystem
However, in my view, this is an exercise in futility.
Other Android-based devices are able to implement Android Pay. The barriers to actually moving from using Samsung Pay to Android Pay are virtually nonexistent from the perspective of the consumer, so it's hard to buy the "Samsung wants to build its own walled garden" argument here.
Samsung's gig just isn't in software and services
Samsung builds nice Android phones, packed with generally top-of-the-line specifications. Thanks to aggressive marketing, the company is arguably the best-known alternative to Apple in the premium portion of the market.
Samsung's strengths have been and continue to be its ability to design and manufacture the components that go into mobile devices It manufactures many of the chips that go into its phones and is increasingly building the chips that go into its competitors' phones, too. Ditto DRAM, NAND flash, image sensors, and displays.
Indeed, Samsung has been more aggressive recently about its components business, focusing on trying to win major chip foundry contracts, supplying displays and memory to direct competitors, and so on.
Software and services just really isn't just Samsung's strength, and although the company can throw tons of money at the problem, I'm not convinced that this would lead to the fundamental companywide changes needed to really become a software- and services-focused company.
At the end of the day, I believe that Apple will continue to aggressively roll out Apple Pay worldwide, doing the necessary work to make sure that this service is an integral part of the iPhone ownership experience. Samsung will continue to try, too, but it will -- like so many of the other features that it has introduced in its flagship devices over the years -- merely be a gimmicky selling point so that it too can say that it has its own mobile payment service.
