Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
ANALYSIS Samsung's combined set-making business mimics Apple
By Baek Byung-yeul
By Baek Byung-yeul
Samsung Electronics implemented a large-scale reshuffle of executives Tuesday and one notable aspect was the appointment of Han Jong-hee, president of its TV business, as vice chairman of a new division made up of the TV, consumer electronics and mobile communications units.
Samsung calls the new “end products business” the SET division which will now oversee TVs, home appliances and mobile devices such as smartphones, tablets and smartwatches.
Regarding Han's appointment as vice chairman of SET, Samsung said, “We expect him to lead the SET division by maximizing synergy between units and finding future growth opportunities such as new business and new technologies.”
The change can be interpreted as Samsung's willingness to create a strong ecosystem for its home appliances and smart devices to compete against Apple, which has created numerous die-hard fans by offering seamless connectivity and convenience between its devices, according to officials.
Though Samsung has been lagging behind in the premium smart device category, its home appliance and TV products are highly competitive.
Samsung has led the global TV market in sales for 15 years. Also, it has grown to dominate the home appliance sector with its BESPOKE customizable brand, introduced in June 2019, which allows customers to tailor their own configurations of material, color and modules.
Even though Samsung has two powerful end product brands ― BESPOKE for home appliances and Galaxy for mobile devices ― the company has not been able to create enough synergy between them, because their respective business units operated independently.
Samsung has already taken steps to fuse the two brands through the BESPOKE edition of the Galaxy Z Flip3 foldable phone released in October. By offering as many as 49 color options, Samsung is letting consumers make their own versions of the clamshell-style foldable smartphones.
Under the new vice chairman, who has been recognized for making Samsung become the absolute leader in the TV business, the company is expected to take steps to appeal more to younger consumers through a convergence of the BESPOKE and Galaxy brands.
The combined SET business means that Samsung may target a software company for acquisition, due to its need to establish a powerful end product ecosystem as Apple has done.
For years, Samsung has reiterated its intention to acquire companies with the potential to strengthen its presence in the IT industry. The electronics giant has not specified its acquisition targets or the specific timing of a possible deal, but industry insiders believe Samsung is interested in acquiring a chip foundry firm.
However, chances are also increasing that Samsung may turn its eyes to software industry firms as the combined Galaxy and BESPOKE ecosystem will require strong software that can help the products from the two brands create more value than being just linked to each other.
Michael Fritzell, a Singapore-based analyst at Asian Century Stocks, said Samsung's competitive edge over other companies comes from its hardware capability. But he pointed out that the tech giant needs to improve its competence in software to better compete against Apple.
“Samsung's American competitor Apple has defended its market share by building an ecosystem of devices via clever software integration. And I also find it instructive that Japanese competitor Sony Corporation today almost makes all of its profits from its gaming console, Sony PlayStation. The PlayStation product is also an entire ecosystem that offers more than just hardware,” the analyst told The Korea Times, Tuesday.
“The software enables a technology company to lock in the customer and for devices to work together in harmony. If Samsung could build a software ecosystem around its devices rather than relying on Google Android, it would be better able to defend itself from Chinese competitors. Unfortunately, I don't see a strong ecosystem in Samsung's devices that could help ensure customer loyalty,” he added.