tuolumne
09-07-2005, 10:42 PM
Samsung lowers its sights
Samsung president Lee Ki-tae has indicated that the South Korean vendor will turn its attention to low-end handsets, an area that it has traditionally steered clear of. Samsung, which is the world's third-largest mobile phone manufacturer, has to date driven growth on the back of high-end products and a average selling price that has been the envy of its rivals. Comment: Samsung's apparent change of heart is actually not that surprising. Its meteoric rise to the number-three position was achieved by riding the crest of a wave (high-end, fashion clamshells) that is now breaking, and what it needs to do now is find new ways to expand its business. Targeting the growing demand from first-time mobile customers in emerging markets such as China and India is an obvious way to do this.
Samsung is not the first top-tier vendor to embrace this strategy - Motorola and then Nokia have taken this path. Both have committed to high-volume, low-cost devices at around $40, a price point considered critical to successfully addressing the 'next billion' mobile customers. Many of these new customers will be acquiring their first phone of any description, fixed or mobile, making the business opportunity enormous for those able to achieve the necessary economies of scale.
However, there is no way that Samsung will take its eye off the high-end market, where it has an excellent reputation and where it is putting in a lot of R&D effort, particularly around imaging products. We also think that when Samsung talks about the "low end" it means the lower end of the mid-range market as well as ultra-low-cost devices. Samsung has lost out in the lower-mid-range market to rivals such as Sony Ericsson with the best-selling T610 camera phone. Attractive low/mid-range products of this kind will also find a ready market among the more affluent sectors of society in emerging markets, and provide a migration path for first-time buyers in these markets.
http://www.ovum.com/news/euronews.asp?id=3129
Samsung president Lee Ki-tae has indicated that the South Korean vendor will turn its attention to low-end handsets, an area that it has traditionally steered clear of. Samsung, which is the world's third-largest mobile phone manufacturer, has to date driven growth on the back of high-end products and a average selling price that has been the envy of its rivals. Comment: Samsung's apparent change of heart is actually not that surprising. Its meteoric rise to the number-three position was achieved by riding the crest of a wave (high-end, fashion clamshells) that is now breaking, and what it needs to do now is find new ways to expand its business. Targeting the growing demand from first-time mobile customers in emerging markets such as China and India is an obvious way to do this.
Samsung is not the first top-tier vendor to embrace this strategy - Motorola and then Nokia have taken this path. Both have committed to high-volume, low-cost devices at around $40, a price point considered critical to successfully addressing the 'next billion' mobile customers. Many of these new customers will be acquiring their first phone of any description, fixed or mobile, making the business opportunity enormous for those able to achieve the necessary economies of scale.
However, there is no way that Samsung will take its eye off the high-end market, where it has an excellent reputation and where it is putting in a lot of R&D effort, particularly around imaging products. We also think that when Samsung talks about the "low end" it means the lower end of the mid-range market as well as ultra-low-cost devices. Samsung has lost out in the lower-mid-range market to rivals such as Sony Ericsson with the best-selling T610 camera phone. Attractive low/mid-range products of this kind will also find a ready market among the more affluent sectors of society in emerging markets, and provide a migration path for first-time buyers in these markets.
http://www.ovum.com/news/euronews.asp?id=3129