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How Samsung found its way to the top

Posted: 18 Nov 2008     Print Version  Bookmark and Share

Keywords:Japan companies  memory chips  consumer electronics  multiple-sourcing strategies 

Fast forward to 2008
Puzzling to some in the industry is that even today, with Samsung an undisputed leader in the digital CE market, powerful enough to influence the entire industry, the Korean giant never seems eager to take sides in format or standards battles. Whether Blu-ray vs. HD DVD or diverging home networking standards, Samsung is rarely in the thick of the argument advocating one approach over the others.

Why? Said Yun, "We try every format. We just don't know which will win." With a touch of irony, Yun added, "While Japanese manufacturers may be experienced enough in format wars to make the right decision, Samsung was never afforded the opportunity to gain that insight. As a 'kohatsu,' we've had no choice but to bet on every horse."

While Yun still defines his company with the humble term "kohatsu," that's far from reality.

Chris Fisher, CEO of The Ether Group consulting firm, observed, "Samsung subscribes to a philosophy that consumers are fickle and markets are fickle. No other company understands it better than Samsung. They bet across all of the technologies to win."

In fact, Samsung has pursued every FPD technology, from digital light processing and liquid crystal-on-silicon to PDP and LCD.

After rising up from the ashes of the Asian financial crisis in 1997, Samsung has doubled in number of employees.

Samsung also freed itself from Japan manufacturers' obsession with forming alliances. Rick Sizemore, chief strategy officer at Multimedia Intelligence, described the MP3 wars as most interesting. "Sony had the Walkman but it got eclipsed by Samsung," he said. Not just in regular MP3 players, "but in the form of Apple Inc.'s iPod Nano. Apple picked Samsung to supply the chipset that made the Nano so thin."

Sizemore observed, "Samsung has done a vicious job of winning sockets from memories to displays."

Similarly, the Korean giant made an early mark on the cell phone market, identifying it as "a digital convergence platform" where its own memory, display and LSI technologies could be heavily exploited.

Engineering force
When comparing Samsung in the 1970s with Samsung today, what has really changed?

"Engineering resources," Yun said. Samsung recruited high-quality engineers—not just in South Korea, but also in the United States.

South Korea's entry into the electronics industry in the 1970s followed four principles Japan rivals had practised in the 1960s: Emphasise mass production, learn from foreign technology, use a follow-the-leader strategy and take advantage of government support.

Samsung pushed those principles to the extreme.

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