 Hey guys, it's Yon from The Verge. I'm here with our new executive editor, Dieter Bohn. Hello. In this totally not contrived situation, during which we will discuss Samsung. Yeah. Yeah. Yeah. What the heck? They just had their quarterly earnings like everybody else on the planet, and the news wasn't super great. Yeah, they're down. They're down. Their net profits were down year over year, and that's the first time I think that's happened since they had their big Galaxy phone explosion. And their other operating profit, the other profit measure, has been down for three consecutive quarters. So basically, Samsung was the only company on the planet other than Apple that was completely rocking and rolling on phone sales. And kind of just like Apple, they've kind of hit the plateau of what's happened. But Apple's phone sales are up. Yeah, but the people are a little bit concerned about Apple. But Samsung's is more dire than Apple's, it seems. But the problem seems like they're not necessarily United States, right? They're in Europe, they're definitely in China. What's going on there? So the China thing is the big problem. So Vlad Tava put up a really excellent piece where he makes the case that the way that Samsung won, there's a few ways, but one of the ways they won is they had really good parts and they could sell them for cheaper than anybody else and a good enough phone. And that game worked for them for a long time, but they're getting beat by that same game by people in China. So people in Xiaomi and Huawei. Obviously making cheaper phones, larger screens. Yeah, they're making cheaper phones, larger screens, but they're good enough quality, and they're a better fit for that market right now. So this leads into what I think is my universal theory of Samsung, which is that they own display companies, right? So they're not totally vertically integrated, but they're very closely aligned with these huge display manufacturing facilities. And chips, too. And chips. So if you look at the TV market, Samsung totally took over the TV market by being the first to ship huge LCD TVs for cheap, and now they own that market. If you look at phones, what's happening in phones, the screens are getting larger and larger. Samsung, obviously the first to ship gigantic OLED phones. And nobody knew that this was going to be a hit, but they were able to ship so many screen sizes and then optimize against a huge screen like the Galaxy Note 3, they'd be enormously successful before anybody else could catch up. I think that leverage is kind of over for them. I think, I don't know that phones necessarily are going to get bigger than this. I think if you- I wish I could say I agree with you, but I don't know. Because every time I've been saying phones aren't going to get any bigger for two years now and I've always been wrong. Right. I just think we're at a point now where if you look at like Apple's Mac sales are going back up, right? And iPad sales are shrinking. I think you're going to end up with a really big phone and a laptop and somebody has to figure out what tablets are going to do. And the only company that's been really successful in tablets is Apple. This is the Tab S. That's the Tab S, the bigger one. This thing, by the way, this is the grossest feeling substance that's ever been produced. That was the other thing that came out of the earnings call is it sounds like they are finally getting the message that we don't enjoy this plastic. This weird, simple thing. It's only taken several years. And so apparently they're going to have another flagship phone release that's not a Note later this year that's going to have better materials, higher quality materials. And that's got to be a reaction to Apple. I mean, because Apple is going to do a big phone. I've been waiting for a big iPhone for a long time. The main attraction of this device to me is not the pen or Samsung's weird software, but it's gigantic screen. And every time I look at one, I'm jealous of how big the screen is. That's the thing that when you talk to actual regular consumers, especially in the US, but I think in the other markets too, it's like, why didn't you get an iPhone? Oh, I wanted the bigger screen. So once that goes away, Samsung is potentially in big, big trouble. So how do they differentiate? How do they solve it? They have to do a better job of what, like they need to like do what HTC does, make a nicer looking phone, but that certainly hasn't been enough for HTC. So they also have to fight and try to like, I wouldn't want to be Samsung right now, but they've been so successful and they've like risen above the stereotype that it's really, really crappy software, really, really cheap design. If they can do that and just execute better on the plans they already have in place, get ties in phones on the low end, make a high end phones seem nicer and better and make their software actually feel compelling and not, eh. Those are all hard problems, but they're actually, they are attacking all three of those things. Well, particularly the third one, because they're in constant conflict with Google over what Android should be. So Samsung's the only company that has ever managed to turn a profit on Android really. And they're doing that on tablets, on phones, and now on watches. They're having that fight. Right. So hard to be Samsung right now. Anyway, that's us. Thanks for watching. I'll see you next time.
 Hey guys, it's Yon from The Verge.
 I'm here with our new executive editor, Dieter Bohn.
 Hello.
 In this totally not contrived situation, during which we will discuss Samsung.
 Yeah.
 Yeah.
 Yeah.
 What the heck?
 They just had their quarterly earnings like everybody else on the planet, and the news
 wasn't super great.
 Yeah, they're down.
 They're down.
 Their net profits were down year over year, and that's the first time I think that's happened
 since they had their big Galaxy phone explosion.
 And their other operating profit, the other profit measure, has been down for three consecutive
 quarters.
 So basically, Samsung was the only company on the planet other than Apple that was completely
 rocking and rolling on phone sales.
 And kind of just like Apple, they've kind of hit the plateau of what's happened.
 But Apple's phone sales are up.
 Yeah, but the people are a little bit concerned about Apple.
 But Samsung's is more dire than Apple's, it seems.
 But the problem seems like they're not necessarily United States, right?
 They're in Europe, they're definitely in China.
 What's going on there?
 So the China thing is the big problem.
 So Vlad Tava put up a really excellent piece where he makes the case that the way that
 Samsung won, there's a few ways, but one of the ways they won is they had really good
 parts and they could sell them for cheaper than anybody else and a good enough phone.
 And that game worked for them for a long time, but they're getting beat by that same game
 by people in China.
 So people in Xiaomi and Huawei.
 Obviously making cheaper phones, larger screens.
 Yeah, they're making cheaper phones, larger screens, but they're good enough quality,
 and they're a better fit for that market right now.
 So this leads into what I think is my universal theory of Samsung, which is that they own
 display companies, right?
 So they're not totally vertically integrated, but they're very closely aligned with these
 huge display manufacturing facilities.
 And chips, too.
 And chips.
 So if you look at the TV market, Samsung totally took over the TV market by being the first
 to ship huge LCD TVs for cheap, and now they own that market.
 If you look at phones, what's happening in phones, the screens are getting larger and
 larger.
 Samsung, obviously the first to ship gigantic OLED phones.
 And nobody knew that this was going to be a hit, but they were able to ship so many
 screen sizes and then optimize against a huge screen like the Galaxy Note 3, they'd be enormously
 successful before anybody else could catch up.
 I think that leverage is kind of over for them.
 I think, I don't know that phones necessarily are going to get bigger than this.
 I think if you-
 I wish I could say I agree with you, but I don't know.
 Because every time I've been saying phones aren't going to get any bigger for two years
 now and I've always been wrong.
 Right.
 I just think we're at a point now where if you look at like Apple's Mac sales are going
 back up, right?
 And iPad sales are shrinking.
 I think you're going to end up with a really big phone and a laptop and somebody has to
 figure out what tablets are going to do.
 And the only company that's been really successful in tablets is Apple.
 This is the Tab S.
 That's the Tab S, the bigger one.
 This thing, by the way, this is the grossest feeling substance that's ever been produced.
 That was the other thing that came out of the earnings call is it sounds like they are
 finally getting the message that we don't enjoy this plastic.
 This weird, simple thing.
 It's only taken several years.
 And so apparently they're going to have another flagship phone release that's not a Note later
 this year that's going to have better materials, higher quality materials.
 And that's got to be a reaction to Apple.
 I mean, because Apple is going to do a big phone.
 I've been waiting for a big iPhone for a long time.
 The main attraction of this device to me is not the pen or Samsung's weird software, but
 it's gigantic screen.
 And every time I look at one, I'm jealous of how big the screen is.
 That's the thing that when you talk to actual regular consumers, especially in the US, but
 I think in the other markets too, it's like, why didn't you get an iPhone?
 Oh, I wanted the bigger screen.
 So once that goes away, Samsung is potentially in big, big trouble.
 So how do they differentiate?
 How do they solve it?
 They have to do a better job of what, like they need to like do what HTC does, make a
 nicer looking phone, but that certainly hasn't been enough for HTC.
 So they also have to fight and try to like, I wouldn't want to be Samsung right now, but
 they've been so successful and they've like risen above the stereotype that it's really,
 really crappy software, really, really cheap design.
 If they can do that and just execute better on the plans they already have in place, get
 ties in phones on the low end, make a high end phones seem nicer and better and make
 their software actually feel compelling and not, eh.
 Those are all hard problems, but they're actually, they are attacking all three of those things.
 Well, particularly the third one, because they're in constant conflict with Google over
 what Android should be.
 So Samsung's the only company that has ever managed to turn a profit on Android really.
 And they're doing that on tablets, on phones, and now on watches.
 They're having that fight.
 Right.
 So hard to be Samsung right now.
 Anyway, that's us.
 Thanks for watching.
 I'll see you next time.