WorldITShow The Grand Blue
Samsung rises in the world of smart devices
By Kim Yoo-chul
Samsung Electronics is becoming more powerful in the world of smart electronic devices ranging from tablets and smartphones to smart televisions thanks to ``on-time’’ product releases.
No doubt, Samsung’s key merits are its decisive management, efficient and well-managed manufacturing prowess and units that function well together.
Samsung is the leader in global computer memory chips, flat-screens and televisions, while it only trails the leader Nokia in the overall handsets industry.
Now, Samsung is getting ``smarter’’ as it is set to simplify lives with its smartphones, tablets and televisions.
Also, Samsung has seen an improvement of its supply-chain management (SCM) structures region-by-region, leading it to better manage inventories and to respond to requests from consumers on a real-time basis, according to Samsung officials.
Samsung is also no longer an Apple chaser. Foreign firms once led the way in value-added devices like the iPhone. But Samsung has become what Apple can now claim a rival with both the breadth of products and the appeal of a premium brand.
Its well-balanced business structure ― Samsung makes components, while it also produces finished consumer products ― makes it ideally-positioned for doing business.
And this rapid rise illustrates the highly-competitive world of consumer electronics that its chief executive Choi Gee-sung, the top confidant of Samsung Chairman Lee Kun-hee, is pushing.
In the ``2010 list of the world’s most valuable brands,’’ Samsung was 33rd with a brand value of $12.8 billion, far higher than BlackBerry and Dell.
Samsung also made the largest leap, boosting its value to $11.4 million on the list of the 2010 top 100 most valuable global brands by Millward Brown.
``Samsung has positioned our brand these days as quite a premium. Therefore, we are targeting the latest innovations, the newest products. Samsung has had good take up on that around the world. Different markets have different interests,’’ said Samsung executive vice president David Steel.
Steel said there is definitely still strong consumer interest in new kinds of devices such as smartphones and tablets and those are creating huge growth chances for major brands.
``Samsung is one of them,’’ he said. ``As long as there is a strong consumer benefit, the innovation is perceived to be relevant to consumers,’’ according to the executive.
Samsung Electronics is planning to invest a record amount of 30 trillion won on its key facilities throughout this year. Officials say research and development (R&D) and software-related projects will be given bigger budgets.
Steady but powerful
These mobile tablets, computing devices that someone can take with them for Internet-connectivity create a lot of interest in business as they can see improvements, Steel said.
Samsung is investing more with an apparent aim to see its emerging businesses on track and it has been yielding visible profits.
Samsung said it has no problem to sell over 10 million of its latest Galaxy S, the Galaxy S II, because the previous model helped Samsung secure what company officials say is ``the right springboard’’ for its smartphone business.
Since the last year’s launch, the Galaxy S has sold over 14 million globally, said a chief of its telecommunication division Shin Jong-kyun.
The Galaxy S II will be sold in 120 countries via 140 mobile carriers and Samsung said it has received more than 3 million pre-orders, globally.
``We are seeing more requests from leading carriers in our key markets to allocate more Galaxy S IIs. Supply is quite tight,’’ said a Samsung spokesman Shin Young-june.
The Galaxy S II is featured with a svelte profile, swish animations and a 4.3-inch AMOLED display. Its battery life is ``highly competitive,’’ while its eight-megapixel camera offers a good shot experience to users, according to officials.
In tablets, Samsung plans to increase sales by five-fold throughout this year from the previous year as consumers are showing more appetite for the portable, design-focused PCs.
Samsung plans to release a tablet with 10.1-inch display possibly in the third quarter of this year, which means direct competition with Apple’s 9.7-inch iPad.
``Samsung misread the scale and the speed of the smartphone boom, however, it has been following the trend much faster to secure its bottom line,’’ said Ahn Sung-ho, an analyst at Hanwha Securities, a local brokerage.
Despite stellar achievements in memory chips and flat-screens, a crack appeared because Samsung remained on the sidelines amid the Internet-enabled, application-rich mobile handsets.
Samsung initially had poor responses to its Galaxy S as it’s not quite sufficient to strike a chord with consumers like that of the Apple’s iPhone or even Research In Motion’s BlackBerry.
``We’re focused on what we think we do well, which is making good cool devices that are fun to use, easy to use,’’ said Steel from Samsung Electronics.
Samsung rose to the world’s fourth-biggest maker of smartphones with its global shares reaching 14 percent ― a significant increase from last year’s less than 5 percent _ as of the end of the first quarter of this year, data from market research firm, IDC, showed.
And Samsung is aiming for more.
``The first thing to be clear about is Samsung doesn’t intend to become a media company or a content company, however, we need to partner media companies in a way we never had to before,’’ said the executive.
The marketing expert stressed that what Samsung could offer them is just a platform. ``Let’s say, the video value chain is through standard broadcast TV. Now we can offer all the way from a 3-inch smartphone display to a 7-inch tablet to even a 52-inch TV with apps on it.’’
Trying to get smart TV
While even top television majors are struggling to find their ``right next source’’ for the television business amid flattening demand, Samsung is injecting more resources to tiptoe into an unfamiliar area ― smart TV.
Samsung, which is the world’s top TV maker, is hoping that its variants of smart televisions would replace pay televisions and laptops soon by supplying video content and web browsing through connected televisions.
Smart TV is essentially an interactive TV and is a whole new category of TV that uses an Internet connection to provide additional content such as web browsing, social networking, applications, live channels and video-on-demand.
And a smart TV has been sided with Samsung’s efforts to expand its product portfolio, along with upgraded versions of its Galaxy S, Galaxy Tab, PCs, cameras and refrigerators.
``As a market leader, Samsung is being tasked to take off in the new TV segment. By forming alliances with content providers, Samsung will revitalize the so-called smart TV segment,’’ said Yoon Boo-keun, Samsung’s TV chief, adding it will strengthen its smart TV lineups to achieve this year’s sales target of 12 million.
Still, Samsung’s relative weakness in software and services are cited as major hurdles for Samsung to further effectively push its smart TV business.
``In handsets, Samsung’s in-house mobile platform Bada is ready to take off. Samsung is investing extra resources in software because that’s necessary,’’ said Shin.
According to sources, Samsung has been in talks with several content-producing companies for alliances or even an aim to strike an acquisition, though Samsung declined to unveil the name of the companies that it has been in talks with.
Last year, Samsung released TV sets that realize three-dimensional (3D) images. It sold over 2.5 million 3D TVs, last year.
The 3D TV market, however, is still in an early stage as 3D titles have struggled. There isn’t much content and few consumers even in developed markets are ready to pay a premium for 3D televisions.
``We are a hardware-centric company, however, we’ve learned how important eco-system is. Samsung won’t make the same mistakes and that means we will construct a 3D eco-system,’’ said another high-ranking Samsung executive.
Samsung is still leading the global market for 3D televisions. It forms a so-called ``shutter glass community’’ with Japan’s Sony and Panasonic.
Samsung’s battery-powered 3D technology could provide more vivid images and the prices for its shutter glass-based glasses have been lowering as Samsung is more than keen to gain more stakes in the highly-lucrative 3D television market.
To make the most out of 3D images, watchers should wear special glasses.
The shutter glass community is a strong backer of a quite expensive ``active’’ glasses, while LG Electronics and some of leading Chinese companies promote a cheaper ``passive’’ glasses system.
Samsung TV head Yoon said 3D televisions without glasses won’t materialize over the next few years mostly due to higher manufacturing costs.
Only time will tell whether Samsung’s strategic product lines will represent a much-needed, long-term win. At least Samsung has sent firm signals that it hopes to lead the game.
After selling some 64 percent of 3D TVs, last year, the technology’s first year, Samsung is better positioned to cash in on the huge growth, if it happens.
Yoon said bigger shares will help Samsung win the standards battle.
DisplaySearch, a market research firm, forecasts that 18 million 3D televisions will be sold, out of a total of 247 million.
``It seems to have realized that if Samsung is going to take the smart device market by storm, it won’t be able to do it alone. That’s a good lesson in the wake of the iPhone success,’’ said Lee Jong-su, a media critic at Seoul’s Hanyang University.