As Samsung Electronics's005930.SE -0.36% best-selling smartphones face increasing competition from a horde of Chinese lookalikes, one of the South Korean giant’s key goals has been to translate demand for its devices into interest for Samsung’s homegrown software and services.
But a new study shows how far the company still has to go.
Strategy Analytics, a Newton, Mass.-based research firm, said in a report Tuesday that U.S. users of Samsung’s devices spend little time on its own messaging, music and voice-activated applications including apps like ChatON, the South Korean company’s answer to services like WhatsApp, Line and Viber.
The report said that U.S. users of Samsung’s Galaxy S3 and S4 smartphones logged an average of six seconds per month using ChatON, compared to more than 11 hours per month on Facebook and about two hours per month on Instagram.
The Strategy Analytics study tracked more than 250 U.S. users of the Galaxy S3 and S4 and their use of apps last month. On average, users spent just seven minutes during the month on an array of Samsung apps — including ChatON, voice-activated search app S Voice and app store Samsung Hub. By contrast, they spent an average of 149 minutes on just three apps by software partner GoogleGOOGL +1.07% — its app store Play Store, video-watching site YouTube and its flagship search engine.
“The battleground is shifting towards capturing on-device usage market share,” says Bonny Joy, who chairs the AppOptix unit of Strategy Analytics that headed the study. He added that while Samsung devices are “packed with an army of apps,” users were generally ignoring the company’s pre-bundled software offerings. That makes it more difficult for Samsung to assemble the kind of ecosystem of software and services that analysts say keeps Apple’s users loyal.
A spokesman for Samsung wouldn’t disclose how many subscribers ChatON has or how many messages are sent each day on the service. The company said last year that ChatON had surpassed 100 million users. That’s in part because ChatON comes preinstalled on Samsung’s Galaxy S3 and S4 devices, and can’t be deleted.
In a statement, Samsung said it offers “a wide selection of differentiated service and content offerings for consumers,” including those created by third parties. For its new flagship Galaxy S5 device, it expanded its slate of partnerships to include health and wellness app Lark and contact-sharing app Flick Dat.
But the Strategy Analytics numbers show that, for all of Samsung’s efforts developing its own apps and services, challenges remain.
In an interview earlier this month, Wonpyo Hong, president of Samsung’s Media Solution Center, which is responsible for developing apps and services, called software “critical,” noting that the company had more research and development engineers focused on software than on hardware.
At the same time, Mr. Hong acknowledged that “from a consumer perspective there is room to improve to deliver a unique experience,” promising to focus more on that area.
Aggressive and creative marketing has helped make Galaxy devices the best-selling smartphones in the world, and while the company typically loads up its devices with its own apps, that hasn’t translated into any affection for those services.
Worse, regulators in Samsung’s home market of South Korea earlier this year imposed new regulations on the pre-loaded apps known derisively as “bloatware,” forcing Samsung to give users of its new flagship Galaxy S5 more latitude to delete them.
On average, Galaxy S4 users have 21 more apps than the industry average, according to Strategy Analytics.
“Samsung’s dominant position in the market is an ideal vehicle to drive own-branded content services,” said Barry Gilbert, a vice-president at Strategy Analytics who helped manage the study. “Samsung should develop a differentiated set of apps that will resonate with its user base.”
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