There’s a shake-up at Samsung in both management and corporate structure. Choi Gee Sung becomes Samsung’s CEO and Lee Jae Yong, the former chairman’s son, becomes COO. Furthermore, Samsung will now be reorganized into seven autonomous businesses with their own presidents and CFOs. Apparently, the end result of all this is to create a more streamlined company able to react more reaily to challenges and opportunities. At least that’s what all the press releases say.
However, according to BusinessWeek, the bulk of these changes are due to Samsung’s “Apple Envy.”
Why make the change now? Some Samsung watchers have a one-word answer: Apple (AAPL). For all its success in consumer electronics, they say, Samsung is an also-ran in the battle to win customers away from Apple’s iPhone. This means the company needs a new direction if it has any hope of meeting the challenge from Apple and its smartphone. “Samsung must have taken a whopping blow from the revolutionary popularity of the iPhone,” says Park Kyung Min, a longtime watcher of the biggest Korean company and chief executive of fund manager Hangaram Investment Management. “To emulate Apple it needs a new start.”
Ole Lee Kun Hee built the business in the 90′s and 00′s to take on Sony. They have done that and more. Could they be gearing up to take on Apple? Well, the two businesses are very different and Samsung still sells a lot of memory chips to Apple, but don’t be surprised if Apple starts to decouple from Samsung. Apple is buying increasingly more memory chips from Toshiba and already buy the bulk of their LCD panels from LG (including the OLED panel for the highly anticipated MacBook Touch).
Samsung thinks they have at least part of the answer in Bada. Although the smartphone operating system was announced a month ago, it was only last week where any meaningful details were given in a London press conference. From what can be gleaned (and I could be wrong) Bada looks primarily like a media and entertainment oriented operating system. However, most of the market does not buy smartphones to watch movies and play games. Industry insiders said the initial details of Bada left more questions than answers. It’s not surprising. In recent history, Samsung’s response to initial challenges were to come up with a bunch of not well holistically conceived stop gaps measures. Example here and here.
But the fat profit margins afforded by smartphones are just too big to ignore, so expect Samsung to continue to make an effort to meet the iPhone (and RIM) threat.
(HT to kushibo for the “Apple Envy” article)
{ 32 comments… read them below or add one }
let’s not forget one thing. if koreans say they are going to do something, their competition better be scared. now, if you will excuse me, i have a call from sony, the second largest electronics maker after samsung.
count the koreans out at your own risk.
As it stands, every dollar Apple gives Samsung for chips, about seven to ten cents of that goes into Samsung’s R&D. If more and more of that R&D goes to developing competitor type products to the iPhone, iPod, etc. expect Apple to be buying their memory chips elsewhere…
The iphone and other smart phones are basically made from the same materials and with similar manufacturing technologies. What makes the iphone very different is the user interface, which is essentially a design element based on communication between the hardware and the human.
Korea has proven it can successfully follow around stamping out replicas and me-too products at lower prices. However, Korea has to make a leap in the communication and interactive design area if it is going to lead the world in this market rather than producing follow up products.
‘Korea has proven it can successfully follow around stamping out replicas and me-too products at lower prices. However, Korea has to make a leap in the communication and interactive design area if it is going to lead the world in this market rather than producing follow up products.’
more shit talkin from the mizar-lover. how’s china?
vince,
I think that’s a good point. Korea is trying to figure it all out. It may require a cultural change, which would be a pretty big leap. Also, respecting the value of software might be a good place to start.
If I was Samsung’s consultant I would tell them to buy or start up a purely software division that’s highly decentralized in maybe San Diego or Northern California. The less Koreans from Korea working at that division the better. Not because Koreans can’t make software, but because Korean software making ability is still going to take years and years to develop and I don’t think Samsung has years and years of time to get “smart” in smartphones.
I remember like 3 years ago, reading about the haeptik and thinking it was the shit. Then I read about the iPhone and it was a whole new ballgame. It was a bit like being an 8-year-old Chicago Bulls fan in the 1983, thinking that Norm Van Lier and Jerry Sloan were God’s gift to the guard position. Then in 1984, the next year, seeing your gauge of spectacular blown away when Michael Jordan laced up.
I know I’m a total one-note flute when it comes to Samsung phones, but here’s that one note again: my Samsung mp3 player doesn’t play mp3s. QED.
Nice write-up WangKon; really.
I think if they want to beat Apple in the UI arena, which is really what is necessary, as vince pointed out, they will have to conduct some deep research into learning and human machine interaction, just like Apple did when they were developing their Lisa OS. The push for ever more processing power, and ever more features as the sole means for boosting sales has been proven false by the likes of the Wii and iPhone.
KzR,
The Wii is an excellent example. Although my PS3 gives me a hard on personally, it doesn’t get the chicks in the door like a Wii does…
Microsoft’s greatest UI achievement was Windows back in the late 80′s. However, Windows wasn’t even Microsoft’s idea. They stole it from someone (Xerox’s PARC and Apple’s Lisa). Microsoft has been riding on that one trick pony for over 20 years now. It’s amazing the kind of technology inefficiency a market can support when it operates in a freak’in monopoly!
vince mentioned the interface. If Samsumg will work on that front, they need to understand how different cultures like to ‘interface’ with electronic products.
Take car navigation, for instance. In Japan, people like the touchscreen interface; in Europe – say, Germany – people prefer it at the center console, either by using arrow buttons or small joysticks. No screen touching, the comfort of having your arm resting on the armrest (quite redundant, I know) and having your hand reaching the controls under it prevails over reaching for the front panel.
When it comes to phones, everybody really likes the iPhone interface? Its success is driven by the interface or by the brand? Some people are more “blackberry oriented”, i.e., using the pen and such.
If Samsung figures that out and comes up with something new and creative (a mix of the two?), they may be very successful. The question is how to make the brand “Samsung” to obliterate the Apple appeal.
I’d agree with this. When I joined Chaebol, Inc., one of the Russian engineers who had been poached from Nokia, and who hated this company, was laughing at his boss’s orders to make the best {component that I won’t say because it would make it easier to find my identity} in the world. He was fed up with some of the things that go on here (understandable), and quit. But apparently the project went forward. A few weeks ago I was talking to a guy I know from sales in the gym about the business trip he’d just returned from in Cali. He said he was pimping our company’s {component} there. I asked him who our competitors were, and he said there are none, that our {component} is unrivaled in every desirable attribute. Impressive.
(Now that i’ve given you a boner, Pawi, here is the part where I step on it. Sorry, but I’m just being fair.)
But there is an ugly side too, like how much of the know-how comes from Japanese (or other) “mercenaries.” So Vince (if your axed self is reading this), this is part of where your “stamped out replicas” stuff might come from. It’s a development “business model” that works very well, but it’s Western Ethicist’s nightmare.
Chaebol, Inc. has been well aware that their software is lacking. It will be interesting to see how this smartphone endeavor plays itself out. I just wish they’d stop broadcasting laughably pathetic “Our products are better than the iPhone because of some nonsensical reasons, so buy them” propaganda on the morning propaganda broadcast.
cmm,
The latest “our products are better than the iPhone because of some nonsensical reasons, so buy them” propaganda is that the Omnia II has the AMOLED screen vs. the iPhone’s regular LED screen! BUT… it still relies on resistive touch screen technology so you’ll have to keep pressing the screen a few times to get shit to work…
As I said before….
When it comes to developing intuitive software rather than an engineered product… I think it’s good advice…
WangKon, yes, that’s part of the message; they even showed a side-by-side display performance comparison performed at -40degrees to show the iPhones relatively sluggish response. “Localized products are best for you,” and “you should support your own company/country” are other messages. Luckily people aren’t that stupid, and only those in management seem to follow it, for the sake of their image. If you paid me their salaries though, I’d use any phone you give me.
I also like your Cali-codewarrior idea. Out CTO has told me many times that he’d like to start up an R&D center in the USA, using the different talents of the USA workforce. The Chaebol group, as a whole, has been eyeing/experimenting with the idea. Who knows, that might just be my way out here…
And your observations about the screens and touch controls are spot on. Going from using gf’s touchphone and my ipod touchy I notice both of those things… the Touch is nicer to touch, and the chaebol, inc. display is better to look at. Both in one model would be great.
You didn’t hear it from me, but there are some touchscreen innovations in the pipepline somewhere. Some use new lower price materials, and some even have tactile feedback. Tactile feedback from a touchscreen, fancy that.
cmm, you wouldn’t expect your child to learn to read from scratch, would you? what’s wrong w korea buying technology that already exists? i don’t know why folks would look down on that. anyway, have a good day.
I guess that I’m just a Luddite resisting assimilation to the Borg. I barely have a bulky old cellphone and refuse to give out my number to students because I hate talking except face to face. I’ve never liked telephones, not even the kind that one had to turn a crank to operate — and, yes, I remember a few of those from my Ozark childhood.
So . . . I’m really lost here. What the hell is “tactile feedback”? Sounds like ‘Borgification’ to me. Is it something that I need to fear?
Jeffery Hodges
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No, I wouldn’t expect my child to learn to read from scratch, but I also wouldn’t hire a Japanese expert to do his homework for him while he is playing Nintendo. I’m not talking about “buying technology that already exists.” I’m talking about hiring people from competitors, or from companies whose market we’d like to enter into, with the main purpose of getting their secrets–for example ENTIRE MANUFACTURING PROCESSES and EQUIPMENT DIAGRAMS. Highly effective… hiring one ringer can save years of research time and money in one move.
It’s like this – imagine if a search engine start-up poached Google’s top talent, employed them under different name (e.g. Hangeul-izing their Kanji names, or just giving them a nickname), and expected them to bring all Google’s code and expose all of the secrets of Google for the start-up. And then they did.
tactile feedback – when you push a button, you can feel it clicking, letting you know your intention has been registered. Touch screens obviously don’t have that–yet.
Thanks, CMM. I suppose that will at least be quieter than the beeps I hear when I input code to withdraw money from an ATM.
Jeffery Hodges
* * *
http://en.wikipedia.org/wiki/Haptic_technology
But AMOLED has those plastic fantastic bitches whom their ads strongly suggest not “resistive”. What under-engined local ajeossi or ajeossi in training can resist that?
cmm,
Those sound like good ideas. You have management potential (between the ears at least)! Do you think being non-Korean will hurt your chances of getting there? Serious question. And I don’t mean simply because you are non-Korean but maybe because you can’t smooze as well w/upper management and/or because you can’t simulate being the typical confucian talking head/minion/underling, etc. (please no flaming Korean management comments after this)
Btw… rumor has it that the MacTouch will have both… a slick and bright OLED screen (by LG) and captive touch screen.
Samsung is going to have a rough time in the smartphones market moving foward because Google is also gearing up to be a player to be reckoned with. They’re coming out with the Google phone.
The hardware itself will be sourced from Taiwanese make HTC. Main chips will be sourced by LG. They’re not looking to make money from the hardware.
But the differentiator is Google’s revamped and polished Android OS. They also have a unique business model which is differs significantly from Apple. Android will be open source distribution unlike Apple’s closed, proprietary iPhone OS. I don’t see how Samsung’s gonna get developers excited about the stupidly named “Bada” when Android’s gonna be stealing thunder in the coming months.
I’ve also heard rumors that calls may be free (revenues generated by click-ads).
Yes, it already has. Not because of racism, but simply because I am not good enough at the 한국말. I’m not a total Korean language idiot, but to operate in rolls outside of research, I’d either need to get intensive language lessons, or get a personal translator to go with me everywhere (I’m not important enough for that, unfortunately). While either could be possible, they’d be limiting my options. My options are probably brighter and definitely more plentiful back in the U.S., assuming you all don’t drive the country completely into the ground before I make it back.
Anyway, that’s the general fate of foreign researchers here. Development and promotion opportunities are virtually non-existent unless we can speak the language. That’s not to say we are used/abused by the system… having a few years of “Samsung in Korea” on your resume looks good, and can do wonders, especially for people from say Russia. The Russian engineers call this place the “launchpad,” because of what a few years here does to their careers’ trajectories. So I think it’s fair to say that while I’m limited here, being here will remove some limits for me once I’m out.
by promotion opportunities, I mean promotion out of the lab.
#12: I’m guessing you’re new to the business…hiring workers from competing companies is quite old and standard. In fact, a lot of Korean companies don’t really engage in this behaviour too much, at least in Korea as a lot of the engineers tend to know a buddy on the other teams and are bound to talk about current happenings.
The product you make probably won’t out you, but at any rate, I recall of the chaebols that hire “mercenaries”, LG was the biggest offender. Wink if I’m right? Actually, I have no interest in outing you, just the mercenaries part made me curious
I’m with a competitor of LG.
I wouldn’t say that I’m new to the business, and does this “quite old and standard” practice that you are talking about include the mercenaries bringing all technical drawings, manufacturing procedures, formulations, and trade secrets, etc.? Do these employees change their names to prevent a trail from being laid?
I disagree. From what “experience” are you drawing these statements? There are some companies that literally refuse to work with Chaebol, Inc., and others that won’t work with Korean companies at all because of the reputation that we and other Korean companies have earned by stealing IP. I could give you many examples of this, or many examples of on-going things that justify these fears/policies.
Oops, re-reading I realize that I might have been a bit rude with the quotes around ‘experience.’ Sorry about that.
#28: First paragraph, yep. Changing names is usually unnecessary as are taking physical documents (assuming one is competent, the latter is truly useless for various reasons).
Second: I think you misunderstand, I only mentioned the mercenaries, and as you say, most large in-house companies really have no need to seek out swaths of mercenaries when it can be “stolen”. Stealing of foreign IP and hiring workers of the competition is a totally different matter, and to be frank, Korean tech in consumer electronics is really at the top end.
I know people have a tendency to roll their eyes at comments like that but it’s true, and at the current level competing tech (say US/Japanese companies) can end up being similar through independent research or easily mimicked. As noted above, it’s really the simple things that are hardest to get right.
While I’m sure you do have many anecdotal examples of theft (between Korean companies and to the Chinese it’s inevitable, although in a positive aspect it has actually started new Korean companies too), when it comes down to it many of the Japanese chaebol equivalents (zaibatsu) currently do work with Korean companies to a large degree, actually all Korean tech chaebols have some shared research teams going on (hell Samsung/Sony have an open and shared IP policy!), this stealing of IP by Korea is really overblown as the tech Koreans do not have quick access to aren’t really in the market for it (ironically enough, Americans are more guilty of this to the Japanese, to the point where the zaibatsu’s have nearly sworn never to work with American chipset companies ie intel/ibm).
I say this because I guess I’m a merc myself, but certainly when you seek higher employment companies in turn do expect a knowledge of the competing experience to assist in your newly assigned endeavors, they’d be fools not to. At least for the immediate moment, say a Canadian company named after a stupid fruit has taken me in for said purpose and I’ll thank the Koreans. But again, these tech companies aren’t after blueprints/schematics… that stuff is useless.
#30: Er…well, maybe not exactly their name. But who the hell calls them by their name anyway. Certainly not anyone outside of Canada.
Nice articles on Resistive (pressure sensitive) vs. Capacitive (static electricity sensitive) touch screen technologies:
http://english.etnews.co.kr/news/detail.html?id=200912220012
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