How Samsung beat the innovator's dilemma

Samsung sold more smartphones in the first quarter of 2013 than the next four vendors combined, and has cemented a firm lead in the mobile phone market overall, according to the latest stats from IDC

The figures show Samsung's dominance no matter how you slice them.

Samsung sold 70.7 million smartphones, up 60.7% from the previous year. Number-two Apple sold 37.4 million, for growth of only 6.6%. A year ago, the two companies were much closer -- Samsung sold 44.0 million smartphones in the first quarter of 2012, vs 35.1 million for Apple.

If you look at the overall mobile phone market, Samsung still rules, with 115 million units shipped in the quarter. That's nearly twice as many as number-two Nokia, which sold about 61.9 million.

Samsung provides a great example of how to thrive in the face of the innovator's dilemma.

Go back to the last quarter of 2007, when the iPhone was relatively new and the smartphone market was just getting started. Samsung was the number-two mobile phone maker overall, and shipped 46.3 million phones, way behind Nokia's 133.5 million. Samsung didn't really have a smartphone yet -- the Android Open Handset Alliance had just kicked off in November 2007, and the first Android smartphone (from HTC) didn't ship until October 2008. 

But unlike Nokia, who didn't move quickly enough into smartphones and saw its business wither in the face of disruption from Apple, Samsung aggressively embraced Android while still maintaining its feature phone business, flooded the market with smartphones at a huge variety of price points and sizes, and became the undisputed leader in the new market and the mobile phone market overall. Just in time, too -- last quarter was the first time that smartphones outshipped feature phones overall.

This is a good lesson for companies suffering from similar disruptions. Microsoft, with tablets disrupting traditional PCs, comes to mind.

It's also worth noting that while Apple created the modern smartphone market, it is growing much more slowly than the smartphone market overall, and has some particularly fast-growing competitors right behind it -- LG and Huawei both nearly doubled their smartphone sales from the previous year.

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