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Posted : 2014-11-24 16:54
Updated : 2014-11-24 17:07

Samsung to restructure mobile app service

By Kim Yoo-chul

Samsung Electronics is deciding how best to scale down its mobile messaging application business due to weakening profits, company officials said Monday.

"Samsung Electronics plans to exit from the mobile messaging market from region-to-region as part of corporate strategy to restructure unprofitable businesses and improve profitability," a Samsung official said.

He stressed that it's highly unlikely the tech giant will immediately drop its mobile messaging business as the ChatOn service has received positive reviews in some markets.

ChatOn is Samsung's communication service introduced by the Samsung Group's consumer electronics affiliate in Sept. 2011.

Currently, the service is being used in more than 120 countries in 63 different languages. ChatOn is available both on Google Android, Apple's iOS and BlackBerry operating systems.

The number of ChatOn users briefly peaked at 100 million; however, Samsung failed to continue this momentum hit by the rise of various other mobile messaging giants.

"Samsung is on track to streamline its business units. From a business point of view, ChatOn isn't a business that can show improvement in the future," said another official.

The restructuring drive is being managed by the Samsung Future Strategy Office, which handles all key decisions, including reshuffling of top management and investment on group units.

Samsung Electronics has continued to expand its partnership with Facebook on content and other software-driven businesses as an alternative measure to improve its capability on content.

Samsung officials say its ChatOn service will be updated for service users in some markets before being pulled down completely.

China's WeChat is the No.1 provider for mobile messaging applications with the number of registered users reaching over 600 million, helping it take a 35 percent global share, followed by WhatsApp and Facebook. Skype is the world's fourth-biggest, while Naver's Line and KakaoTalk ranked the world's fifth and sixth with global share of 8 percent and 5 percent, respectively.

"When you talk about total numbers, ChatOn looks competitive as ChatON is installed in all Samsung smartphones. The key issue is that usability of the application is low and that means the volume of transaction isn't that much," said the official.

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