INTERVIEW-Samsung Electronics says gaining mobile share
By Lucas van Grinsven
LONDON, Oct 3 (Reuters) - Samsung Electronics <05930.KS> said on Wednesday it was gaining global market share in mobile phones and was targeting the top three.
"We expect some growth in the second half, as in the first. So we fully expect to gain market share and maintain our profitability," Samsung Electronics global head of marketing Eric Kim told Reuters in an interview here.
Samsung is the world's fifth largest producer of cellphones with a 6.9 percent global market share, behind Germany's Siemens AG <SIEGn.DE>, Sweden's Ericsson <ERICb.ST>, U.S.-based Motorola <MOT.N> and market leader Nokia <NOK1V.HE> from Finland.
Of the top five, only Nokia and Samsung can boast profits from their cellphone businesses. Samsung has climbed up from a 4.6 percent market share in 1999.
Although Samsung is still trailing Siemens, which has also grown share consistently in the past years and now has 7.9 percent of the global market, Samsung said it is aiming to become one of the world's top three players.
"We're on target to become one of the world's top three," Kim said.
Gartner Dataquest said in August that Samsung is breaking away from the second tier manufacturers with a range of small phones, which work on all of the world's most important wireless telecoms systems, such as GSM, CDMA (Code Division Multiplex Access) and CDMA 2000.
This sets it apart from Siemens, which only has GSM cellphones that work in Europe and parts of Asia. CDMA technology dominates in the Americas and other parts of Asia, which is where the real growth is, Kim said.
"Europe is a highly saturated market. The real growth is taking place in Asia and South America, while there's still some room for growth in the U.S.," he said.
EXPERIENCE WITH FAST WIRELESS SERVICES
In its home market of South Korea Samsung has gained first hand experience with fast wireless Internet over always-on connections.
This so-called CDMA 2000 1x technology is faster than GPRS (General Packet Radio Service, which also offers on always-on Internet link), which is the upgrade of Europe's GSM networks taking place at the moment.
While European operators are still finding out what they can do with their new networks, Kim plays with a few of his phones and shows a downloaded Karaoke song on his CDMA 2000 phone.
This experience has already given Samsung an edge in the Israeli market, where it has a strong presence.
"A lot of applications that we've developed in Korea are quite a success in Israel," Kim said.
However, Israel -- a nation where nine in every ten adults carries a cellphone -- may be an exception and it may be hard to bring the same services to Europe, he said.
"Europeans have a different taste. That's the reason why DoCoMo isn't taking off outside Japan," he said, referring to Japan's i-mode service, the first always-on mobile Internet service, offering virtual fishing and downloadable pink cats.
The European cellphone market is also less exciting than Asia, because for years European operators have been going after market share and have given phones away, Kim said.
"The dominant manufacturers, such as Nokia, have played the low price game. And low prices mean few features," he said.
This explains why cellphones in Europe are on average much larger than in Asia and do not sport the colour screens and high sound quality that Koreans and Japanese are used to.
FIRST CONSUMER ELECTRONICS FIRM IN TOP FIVE
Samsung, which aims for the higher end of the market and prices its phones accordingly, is the first mainstream consumer electronics manufacturer to enter the top five handsets market.
Analysts have been predicting this development for years, because consumer electronic companies can benefit from strong brands and a global presence. It is happening now because the pieces are finally falling into place, Kim said.
"There's a major benefit from the brand, and more and more phones are sold through normal electronics shops. Our presence there (with TVs and audio) gives us an advantage," he said.
And Korea's strong venture community -- which has a focus on wireless technology and applications similar to the wireless expertise in Scandinavia -- has also helped Samsung add features to its phones and network systems.
In addition, Samsung went through a major cost-cutting exercise three years ago in the wake of the Asian financial crisis.
However, most of these advantages also apply to consumer electronics rivals such as Japan's Sony Corp. <6758.T> and Netherlands-based Philips <PHG.AS>. But they have not been able to crack the secret and have dwindling market shares.
"Ultimately what it boils down to is a deep understanding of this product category and of the consumer's preferences," Kim said.
"For some reason these companies (Philips, Sony) haven't been able to do it. Their products just weren't good enough," he said.
He's not afraid that this summer's tie-up between the cellphone operations of Japan's Sony and Ericsson will threaten Samsung, pointing out that Philips wasted two years due to its failed merger attempt with Lucent's <LU.N> cellphone business.
"They'll be so distracted that it will give us an opportunity," Kim said.
15:08 10-03-01 |
