SEOUL-- Samsung Electronics Co. said Friday that it would
discontinue in most countries a mobile-messaging chat service that
it had heavily promoted in recent years, the latest sign of the
South Korean technology giant's struggles to gain traction building
the software and services that run on its best-selling
smartphones.
Samsung said in a statement it would end support for the
service, called ChatON, on Feb. 1 next year in all markets except
the U.S. to focus on services in "health, mobile commerce and other
platforms." The statement cited the "fast-changing market
environment" for the decision.
Samsung announced in August 2011 that it would launch ChatON,
just months after rivals like Viber, WeChat and Line, and came with
a significant advantage: it came preinstalled on every Samsung
smartphone powered by Google Inc.'s Android operating system, just
as the company was becoming the world's dominant manufacturer of
smartphones.
ChatON also offers a number of features that many of its rivals
don't, including the ability to recall what it called "regrettable"
messages and a free in-app text translator.
The app was available in 67 languages, from Slovak to Malay, in
237 countries. Samsung recently boasted a user base of over 200
million users for ChatON, and claimed to be the No. 1 mobile
messenger application in the U.S. and France.
But those statistics belied a more prosaic reality: the app,
while ubiquitous, was hardly ever used by Samsung's customers.
Instead, mobile users preferred messaging services that their
friends were using, like Facebook Inc.'s WhatsApp, Rakuten Inc.'s
Viber, Line Corp.'s Line and Daum Kakao Corp.'s KakaoTalk, which
was ascendant in Samsung's home market of South Korea.
"There were too many features, and they were talking a lot about
all the features that ChatON could do, versus explaining the value
proposition to users," said Jefferson Wang, a wireless and mobility
consultant at Philadelphia-based IBB Consulting Group.
ChatON's struggles are emblematic of Samsung's larger problem:
while it still sells more handsets than any other company, the
users that buy these phones spend their time using the services of,
and providing revenues to, other software and services companies,
such as Google and Facebook.
A study earlier this year by market research firm Strategy
Analytics showed that the average U.S. user of a Samsung device
spent an average of six seconds each month on ChatON compared with
the roughly two hours that the average user spent each month on
Facebook's Instagram.
In total, U.S. users of Samsung smartphones spent just seven
minutes each month using a variety of Samsung apps.
"Samsung's failure in messaging apps is endemic of a broader
struggle for the company in software and services," said Rajeev
Chand, managing director at Rutberg & Co., a San
Francisco-based investment bank that focuses on the mobile
industry.
Mr. Chand said he was puzzled by Samsung's inability to parlay
its massive handset sales into at least some traction in software
and services, calling it "the defining issue for the company's
long-term success."
"If they don't succeed in apps and software, Samsung has a very
large risk of being relegated to an increasingly shrinking-margin
company," he said, referring to the recent gains that low-cost
Chinese and Indian competitors have made in handset sales in recent
months.
The demise of ChatON comes just days after Samsung's decision to
dissolve its Media Solution Center, the in-house software and
services operation that created the app. As part of its annual
reshuffling exercise, Samsung said that the unit would be
integrated into other parts of the company.
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