Samsung Expands Ties to Android on Tablets
MAY 30, 2011, 8:40 A.M. ET.
By YUN-HEE KIM And JUNG-AH LEE
online.wsj.com
Samsung plans more tablets despite ongoing legal battles with Apple, and Computex, Asia's answer to Las Vegas's Consumer Electronics Show, starts this week, with Acer and Intel expected to make a splash. WSJ's Andrew LaVallee and Jake Lee discuss.
.SUWON, South Korea—Samsung Electronics Co. plans to deepen its relationship with Google Inc. by depending on the U.S. company's Android mobile device software to run future versions of its tablets, the chief of its mobile division said, as it ramps up in the increasingly competitive tablet computer sector.
Samsung, which competes with Apple Inc.'s dominant iPad in the tablet sector, has long been developing its own mobile phone software, Bada, and those phones have competed with smartphones using Google's Android software. But Android has already given Samsung's smartphone business a shot in the arm, and the company is looking to replicate that success in tablets.
While Samsung—which makes everything from memory chips and phones to flatscreen TVs and home appliances—is the world's second-largest cellphone maker by shipments behind Nokia Corp., it still trails Apple's iPhone and iPad in smartphones and tablets. Like many other competitors, it was caught off guard by the success of Cupertino, Calif.-based Apple's iPad when it was launched in early 2010. Compared with other manufacturers, though, Samsung was one of the first few to embrace Android in tablets, launching the 7-inch Galaxy Tab in October to rival the iPad.
Samsung will launch new versions of the Galaxy Tab this summer in two other sizes, an 8.9-inch and a 10.1-inch model, both running the latest version of Android, known as Honeycomb. The 10.1-inch Galaxy Tab, which is scheduled to be launched in June for $499 to $599.
"We'll continue to work with Android on future tablets," J.K. Shin said in an interview at Samsung's headquarters in Suwon, South of Seoul.
Mr. Shin's comments come as Samsung is embroiled in a lawsuit with Apple, a major competitor but also the major customer of Samsung's component business. Apple this year filed a lawsuit alleging Samsung copied the look and feel of its popular iPhone smartphones and iPad tablet. Samsung countersued, alleging that Apple violated patents covering Samsung's cellphone transmission technologies. The company filed suits in the U.S., South Korea, Japan and Germany.
"We didn't copy Apple's design," Mr. Shin said. "We have used many similar designs over the past years and it [Apple's allegation] will not be legally problematic." He suggested the scale of the lawsuit could grow, though he didn't provide more details.
Samsung alone expects its tablet shipments to jump about fivefold this year to 7.5 million units. Market data provider IHS iSuppli forecast in April that Apple's iPad shipments would reach 39.7 million this year.
"Android is the fastest-growing platform and the market direction is headed toward Android so we're riding the wave," added Younghee Lee, senior vice president of sales and marketing. Samsung also aims to differentiate itself from Apple and other tablet makers by continuing to offer various sizes, Mr. Shin said.
As part of that strategy, Mr. Shin said Samsung is in talks with carriers in South Korea and the U.S. to launch a tablet running on a technology called long-term evolution, or LTE. This so-called fourth-generation technology promises faster download speeds than the current third-generation platform, allowing consumers faster access to such applications as TV programs, movies and video conferencing.
Verizon Wireless and other global carriers, including NTT DoCoMo Inc. and Hong Kong's CSL, a unit of Australia's Telstra Corp., have launched services using LTE networks. A number of carriers, including South Korea's KT Corp. and SK Telecom Co., plan to commercialize LTE service this year.
"The 4G [fourth-generation] race has already begun. All carriers are coping with high data traffic with the availability of tablets and without 4G service, it will become increasingly difficult to cope," Mr. Shin said.
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.More than half of Samsung's smartphones launched last year were powered by Android and the company plans to increase that proportion this year, though it didn't disclose details. Samsung this year expects smartphone shipments to jump about threefold from about 24 million last year.
Samsung said it isn't abandoning its Bada mobile software, but it is focusing on Android, especially for the growing tablet business. "When there is a market need for our own software, we will consider it but that's not our plan at the moment," Ms. Lee said.
"Understanding that the market is changing very quickly and being able to embrace market trends quickly is one of Samsung's biggest challenges in the mobile communications business," Mr. Shin said.
Samsung will have an uphill battle this year in tablets. A slew of other PC makers and consumer electronics makers are planning to launch new tablets to compete with Samsung's Galaxy Tab and the iPad on price. For example, Taiwanese PC maker Acer Inc. unveiled a tablet called Iconia Tab A500 in April that sells for $449.99, while Asustek Computer Inc. unveiled a range of new devices a day ahead of the Computex electronics trade show in Taiwan, including the Padfone tablet, which has a detachable smartphone, and $199 netbook that runs on Intel Corp.'s MeeGo or Microsoft Corp.'s Windows operating systems.
"We believe that as time progresses, the tablet market will stabilize. There are a lot of players jumping into the market but it's important to offer a device that customers can relate to and feel it's a necessity in their daily lives," Mr. Shin said.
During the first quarter, Samsung was the world's second- largest tablet vendor behind Apple but it was the world's No. 1 Android tablet provider, based on data from market research firm Strategy Analytics. Analysts say it will still be a competitive race this year and Samsung will need to up its game. Many other competitors are also embracing Android, including LG Electronics Inc. Motorola Inc., ZTE Corp. and HTC Corp.
"Samsung is not going to overtake Apple for the foreseeable future because its volumes are considerably smaller, but Samsung can continue to maintain its leadership of the Android tablet market by enlarging its retail presence in numerous countries world-wide, expanding the range of models across multiple price tiers and spending heavily on marketing to raise awareness among tablet buyers of Samsung's devices and app store," said Neil Mawston, director of Global Wireless Practice at Strategy Analytics.
Mr. Shin said that because competition is so fierce in the tablet space, Samsung recently had to cut prices to attract consumers to its Galaxy Tab. He also hinted that company would be willing to lower prices further in order to gain more share.
U.S carriers Sprint Nextel Corp. and Verizon Wireless cut the price of the Galaxy Tab tablet this year to as low as $199.99 with a two-year wireless-service contract. |
