Why Samsung’s new ‘Business model’ won’t work

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The Verge reported yesterday that Samsung will show obtrusive ads on your smart TV. Not only the new ones, but older models too. This all fits within Samsung’s quest to find new business models. What I don’t understand is that so many companies are making this mistake… A slap-on business model is not a business model…

Slap-on business models

My principle objection with Samsung’s new business model is that it’s a slap on. Slap on business models are where you take a product that has a certain business model and just, well you’ve guessed, slap on a different business model. Usually on top of the old one.

Examples are usually found in the hardware sector, where the manufacturer sees margins decrease due to competition. They then start to think about ways to increase revenue, using everything that is already in place. So they come up with a slap on business model such as ads or a subscription. If the business model is broken, just slap some ads or a subscription on. In essence these manufacturers, like Samsung, are trying to make their product into a platform.

It is NOT a platform

All these companies are looking at Facebook, Google and other platforms that offer ads and they see the enormous amount of money involved. The big difference is that those companies have first built a platform, and then monetized it using ads. What Samsung is doing, is different.

Samsung is taking a commodity, and slap on a new business model. The problem is, you don’t buy the smart TV because it is Samsung’s smart TV. Well, maybe you do, but there are many other TVs you could consider buying that would do almost the same thing. Speculation on the news was even that Samsung might, just like Netflix, start producing its own content. Probably to make you choose a Samsung over another TV. It doesn’t work like that though…

You see, for Facebook and Google, there is no alternative. And that is why for them, the business model with ads works. If I have my facts straight, Zuckerberg knew this very well and built the platform first, got critical mass second, and then monetized. Any other order of events would not have worked. Smart man.

Samsung is trying to make a commodity into a platform instead of building a platform and then monetizing it. It won’t work, people will buy a TV without ads.

My advice to Samsung is to innovate instead. If you want a subscription or ad-based business model, create a product that supports that model instead of just slapping it onto something that you happen to already be doing!

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