Samsung s Smartphone Operating System: bada

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1 CASE STUDY Samsung s Smartphone Operating System: bada CHOI Eunjeong SMARTPHONE PLATFORMS ARE CHANGING THE IT LANDSCAPE Smartphones are shaking up the global IT industry as the market grows at the expense of feature phones. 1 Smartphone sales grew at an annual average of 34 percent, from 123 million units in 2007 to 297 million in 2010, and sales are expected to grow 46 percent year-onyear to reach 630 million in 2012, or 34 percent of the overall mobile phone market. This has led to changes in the rankings of global IT giants: those that entered the smartphone business successfully went up in the list while those that failed to do so declined. Apple, which unveiled the iphone in 2007, jumped to 2 nd place in 2011 from 681 st in 2001 in terms of market capitalization. Google, not ranked in the Global 1,000 companies list in 2001, came 17 th a decade later, with its Android smartphones (manufactured by Taiwan s HTC) launched in In contrast, Nokia, a traditional phone powerhouse, plunged from 20 th in 2001 to 273 rd in Where feature phones refers to all mobile phones other than smart phones 2 Global market capitalization figures for 2001 and 2010 are from Businessweek s Global 1,000 (published from 1988 to 2004) and Forbes s Global 2000 (published since 2003), respectively. 84

2 CHOI Eunjeong At the heart of these changes are smartphone operating systems (OSes). Mobile phones, whose functions have previously been confined to receiving texts and calls, have evolved into handheld computers thanks to these new OSes. Today phone users can surf the web, send s, play games, and shop on smartphones thanks to new phones that can run applications as sophisticated as the ones on their PCs. Both Apple and Google, two of the most successful smartphone beneficiaries, have their own operating bada 2.0 Highlights bada 2.0 supports applications that make life easier for users. It is capable of multi-tasking and voice recognition, with an advanced user interface framework. Diverse applications are available for communications and multimedia functions, including near field communication (NFC), * WiFi Direct, ** Push Notification *** and 3D sound. Developer can build applications based on web standards such as HTML5 and JavaScript. Since the number of applications determines whether a platform is successful, Samsung Electronics has upgraded tools for developers to secure as many apps as possible. Using the Emulator ensures that developers can test in the same environment as the bada OS, while the Performance Analyzer allows them to easily examine the performance of their applications. Moreover, with In-app Ads, developers can insert ads into their apps, helping them secure stable revenue. * NFC is a short-range wireless communications technology that allows simple transactions between devices simply through close proximity. ** WiFi Direct is a technology enabling Wi-Fi devices to connect directly to each other at a speed of up to 300Mbps. *** Push notification allows an application to notify users of new messages or information without the need to actually open the app. January 2012 SERI Quarterly 85

3 Samsung s Smartphone Operating System: bada Figure 1 Smartphone Market Size & Share (in terms of sales) (million units) (%) 40 34% % % 11% 14% 19% Source: Gartner < system: ios and Android respectively. bada, SAMSUNG S OS bada is Samsung Electronics homegrown smartphone OS. The name bada, meaning ocean in Korean, was chosen to signify boundless opportunities for all. Samsung Electronics intends to offer users new experiences, while providing developers with a development environment and market through its bada-powered smartphones and their applications. Its vision for bada is A smartphone for everyone; one that provides accessible, easy-to-use, affordable smartphones with high-end features (relative to the price). While the smartphone user base is fast expanding from early-adopters to the general public, unfamiliar interfaces and high prices remain obstacles. This is where bada phones could gain the upper hand among firsttime smartphone buyers with their familiar interface, diverse functions, optimized performance, and price competitiveness. bada OS has been steadily upgraded since its release. Since its debut to the public at the end of 2009, bada has gone from version 1.0 in May 2010 to 1.1 and 1.2, and then 2.0 in August The 2.0 version newly integrates around 3,000 application programming interfaces (APIs) 3 selected by feedback from users and developers, and according to the results of technology trend analysis. bada 2.0 is now a legitimate competitor to Apple s ios and Google s Android. In parallel with its version updates, Samsung Electronics has released bada smartphones and applications. It rolled out Wave, the first bada 1.0-powered smartphone model in May Since then, under its Wave brand, it has released six different models powered by bada 1.1 or 1.2, and three models powered by bada 2.0. Wave 3, one of the latest arrivals, was first unveiled in France in November In the meantime, bada applications have been distributed through Samsung Apps, the bada applications store, in 120 countries around the globe. 3 API refers to a set of routines, protocols and tools for building software applications. 86

4 CHOI Eunjeong Figure 2 Wave Phones by bada Version Wave Wave 525 Wave 533 Wave 575 Wave 578 Wave 723 Wave Wave 3 Wave M Wave Y bada 1.x ( 7 phones ) bada 2.0 ( 3 phones ) Source: bada < bada, THE FIFTH LARGEST SMARTPHONE OS One year after its debut and the roll out of applications, bada has become the fifth-largest smartphone platform in the world. According to Gartner, a market research firm, Google s Android and Apple s ios performed well(in terms of sales volume) in the second and third quarters of this year, while Nokia s Symbian and Research In Motion s (RIM) Blackberry lost share during the same period. Samsung s bada overtook Microsoft s Windows Mobile to jump to fifth place. Figure 3 Wave 3 Applications at Samsung Apps Source: Samsung apps < January 2012 SERI Quarterly 87

5 Samsung s Smartphone Operating System: bada Table 1 World Smartphone Sales to End Users by OS (Unit: 1,000 units, percent) 2Q Q Q 2011 OS (Manufacturer) Units Market Share Units Market Share Units Market Share Android (Google) 10, , , Symbian (Nokia) 25, , , ios (Apple) 8, , , Blackberry (RIM) 11, , , bada (Samsung) , , Windows Mobile (MS) 3, , , Others 2, , , Total 62, , , Source: Gartner < Sales of bada phones skyrocketed to over 2,055,000 in the second quarter of this year from less than 600,000 a year ago, with market share gaining 1 percentage point to 1.9 percent. Growth momentum continued into the third quarter sales grew by 21 percent from the second quarter to reach 2,478,500 with the market share picking up 0.3 percentage point to 2.2 percent. bada was also classified into a single category on its own for the first time (previously, it had been lumped together with other platforms because of its small market presence). bada s rise is more notable in that the wins were achieved in only one year in competition with dominant players like ios and Android. As bada attracts more users, its ecosystem is also gradually taking shape. Cumulative sales of bada phones, a demand-side indicator, exceeded the 10 million mark, a point generally accepted as successful for a handset model. Sales volume was not achieved by a single model, as was the case for Samsung Electronics Galaxy S, demonstrating that a worldwide mar- Figure 4 bada Ecosystem Source: bada < 88

6 CHOI Eunjeong ket of more than 10 million applications users exists. On the other hand, bada s developer base, a supply-side indicator, is expanding through upgrades, developer support, and the operation of Samsung Apps. As of November 2011, the number of applications registered at the app store is over 70,000 and the cumulative number of downloads over 300 million. More than half the apps registered in and downloaded from the store are based on bada OS. Given this fact, it is fair to say that the bada ecosystem, consisting of the two pillars of application supply and demand is now complete. SUCCESS FACTORS Targeting of Former Low to Mid-range Feature Phone Buyers bada is more popular in Europe and emerging markets. J son & Partners Consulting, a market research firm, forecast bada would lift its share Figure 5 Key Success Factors Targeting of former low to midrange feature phone buyers bada is more popular in Europe and emerging markets. J son & Partners Consulting, a market research firm, forecast bada would lift its share from 3.8 percent in 2010 to 13.5 percent of the Russian market in Localized applications Fifth most widely used smartphone OS Differentiated developer incentives Technological lead in mobile platforms January 2012 SERI Quarterly 89

7 Samsung s Smartphone Operating System: bada Figure 6 bada s Share in the Russian Market 15.4% 2.8% 26..3% 6.0% 0.8% 8.3% 2.4% 5.0% 4.5% 3.8% 13.5% 11.4% 33.9% 10% 4% 3% 17% 2% 4% 11% 25% 2% 5% 15% 37% 3% 6% 16% 45% 81.2% 71.6% 66.7% 45.1% 67% 58% 42% 30% 2008A 2009A 2010A 2011E 1Q 2011A 2Q 2011A 3Q 2011E 4Q 2011F Source: bada s Russian blog <badablog.ru> WM Apple bada Android Symbian from 3.8 percent in 2010 to 13.5 percent of the Russian market in By then, it will be behind Symbian (45.1 percent) and Android (33.9 percent), but ahead of ios (5 percent) and Windows Mobile (2.4 percent). In the first quarter of 2011, it took up 10 percent of the market, which rose to 11 percent and 15 percent in the two succeeding quarters, and is expected to rise further to 16 percent in the fourth quarter. Kantar Worldpanel ComTech s consumer panel showed that in the second quarter of this year, bada accounted for 11.2 percent of the market in France, 4.1 percent in Germany and 3.6 percent in Italy, hovering at a global market share of 1.9 percent as estimated by Gartner. 4 bada phones are popular in areas where feature phones are still the norm because they provide users with a smartphone experience at an affordable price. In France, iphones sell at 163 and Android phones at 71, but bada phones only cost 47. bada phone owners can browse the Internet and install applications just like others do on their more expensive smartphones. A survey found that 90 percent of bada phone owners in France had used feature phones previously. 5 Differentiated Incentives for Developers One of bada s biggest strengths is its use of C/ C++, the most widely used programming languages for several decades. This allows C/C++ programmers to easily jump into the development of bada applications. bada s support of web standards, including HTML5, JavaScript, and the Wholesale Application Community (WAC), is also a significant attraction for webbased applications developers. Web-based applications have significant growth potential because they run on any OS or device with a web browser. The second incentive for developers is bada s diverse promotional events. bada Developer Day, 4 Guardian < 5 Cellular-news.com < 90

8 CHOI Eunjeong Table 2 Programming Languages by Smartphone OS OS (Manufacturer) Languages Release Year Ranking by number of developers bada (Samsung) C/C /1983 1/2 2/3 2/3 Android (Google) Java ios (Apple) Objective C Windows Mobile (MS) C# Source: TiOBE < a showcase for developers, was held in 40 countries in 2010 and is scheduled to be held in 18 countries this year. bada applications development contests have been held both locally and globally since The Global Developer Challenge 2010, in particular, attracted 2,077 individuals or corporate teams from 54 countries who competed for $2.7 million in cash prizes. The bada 2.0 Power App Race is now being held globally for bada 2.0 developers. Samsung has a support program for developers, an incentive that is not available if they develop apps for other platforms. In the program, individual developers or small firms can borrow necessary devices after a simple evaluation process, and access free one-on-one services if they face difficulties while developing apps. To support the developer community, Samsung operates an Ocean Center in Korea where developers can secure office space, devices, training opportunities, and other necessary support. Localized Applications In countries with a high percentage of bada users, localized applications rank higher in Samsung Apps most popular apps list. For instance, AlloCine AlloCine is a free movie guide application available in France. It provides access to 80,000 films, filmographies for 350,000 actors/actresses, high quality movie trailers, and a GPS-based theater finder. In the future, a database of about 6,000 TV shows and ticket buying in advance will be available on the app. TV and movie guide apps were ranked first and third for some time in France, respectively. Train schedule applications topped the list in Italy, followed by movie and recipe apps. In the Middle East and parts of Eastern Europe, Quran and prayer apps for Muslims are popular, and in China, a country with vast land, portal apps offering regional information have become popular. This popularity is a result of Samsung s commitment to tailored apps that reflect each country or region s distinctive culture and lifestyle. What is more notable is the quality of the apps. Unlike Google s Android Market, Samsung Apps offers tested and proven apps only, increasing the public s awareness of bada apps as January 2012 SERI Quarterly 91

9 Samsung s Smartphone Operating System: bada a necessity with proven quality. This, in turn encourages the use of bada apps and the purchase of bada phones. The development and distribution of applications determines the viability of a smartphone OS. Given this, the popularity of locally-specialized apps can serve as the main locomotive for bada OS in its rise in the global smartphone market. Technological Lead in Mobile Platforms The origin of bada dates back to 2000 when Samsung Electronics software center developed the Mocha (Modular & Configurable Handset S/W Architecture) mobile platform. Mocha was capable of 3G video calls in the early 2000s when 2G was the mainstream mobile technology. The platform played an essential role when Samsung Electronics launched the first 3G handset (SGH-Z100) in Europe in After that, Samsung rose from being a minor player to a leader of 3G mobile communications in the region s mobile communications market. This provided the opportunity for the global mobile industry to recognize Samsung s technological expertise in mobile platforms. Later, Mocha evolved into SHP (Samsung Handset Platform), one of the company s major mobile platforms. SHP was used for 50 to 60 million handsets (25-30 percent) out of 200 million units the company produces a year. Benz (SGH-Z500), Soul (SGH-U900) and STAR (GT- S5230) are examples of such mobile phones. So far, STAR has sold over 30 million units, next only to E250 in the list of best-selling mobile phones by Samsung Electronics. SHP, a platform that spearheaded Samsung s spectacular success in the mobile phone business, led to bada, with augmented features such as a multipoint touch screen, 3D graphics, an enhanced user interface (UI), and application downloading/installing. In other words, bada was built upon SHP, the DNA for success of Anycall, Samsung s most successful mobile phone brand, based on expertise in mobile platforms the company accumulated over the last decade. OUTLOOK & IMPLICATIONS The outlook for bada is bright. Google s acquisition of Motorola Mobility last August raised the possibility that the global IT giant will Figure 7 Samsung s Proprietary Mobile Platforms Mocha SGH-Z100 (2003) First 3G mobile phone in Europe SHP Star GT-S5230 (2009) Sales of over 30 million bada Wave 3 GT-S8600 (2011) Powered by bada

10 CHOI Eunjeong launch a hardware manufacturing business. Samsung Electronics who had until then depended heavily on the Android platform, responded by announcing its intention to use bada more aggressively to build a major smartphone platform. Although the bada platform is not open to other handset manufacturers at present, over the long term, the company plans to supply it for free to grow its business. In this rapidly changing smartphone market, Samsung needs something unique to realize its ambitious plans for bada. Above all, it needs to have superior technology to compete with rivals on performance, rather than price. So far, the company has overcome bada phones relatively low performance by strategically positioning them as low- to mid-end devices, achieving a measure of success. Nevertheless, it needs to adjust this strategy as cheap smartphones quickly come online. Samsung needs to upgrade bada into a dual core platform that can handle multitasking and HD video as quickly as possible, while developing bada s distinctive features. The last factor to consider is the possibility of patent lawsuits if the company opens bada to other manufacturers. Unlike Java-based Android, bada is free from Java-related patents held by Oracle, who has demanded royalties of $15-20 for each Android phone, causing difficulties for the expansion of the Android OS. Still, this does not mean that bada is immune to all patent infringement possibilities. Before opening bada, the company has to scrutinize all possibilities and clear the way for bada through cross-licensing and other measures. Translation: BYUN Ha-Na Keywords bada, smartphone operating system, bada phones, ios, Android, Blackberry Second, the company should further expand the bada ecosystem. Some say the bada ecosystem has already entered the stabilization stage thanks to the continued increase in the sales of devices and the number of bada apps. Critics, however, point out that the ecosystem has not been fully activated and is not used by many compared to ios or Android. Accordingly, Samsung has to consider integrating bada OS not only into its handsets but into other electronic devices it produces as well, including TVs and cameras. CHOI Eunjeong is a research fellow at SERI. Her current research focuses on software and services in the area of Information and Communications Technology. She holds a PhD in Industrial & Systems Engineering from KAIST. Contact: eunjeongc. choi@samsung.com January 2012 SERI Quarterly 93