SHANGHAI, 2 November 2004 — The event started with new age digital magic and ended with traditional fireworks and dragons. At the Samsung Global Roadshow 2004, the company behind the world’s 21st most valuable brands sought to demonstrate that it was successfully championing the challenge of digital convergence while maintaining and growing customer loyalty in an evolving environment.
Under the theme “Creating the Future Together,” the Global Roadshow 2004 showcased the entire breadth of Samsung’s digital offerings. On display were the company’s latest mobile handsets, digital TVs, home entertainment systems, networked appliances, notebooks and other examples of Samsung’s design-led, technologically innovative products.
Delivering the event’s keynote speech, Jong Yong Yun, vice chairman and CEO of Samsung Electronics, said: “Today, we herald a new era of the two-way video communication age. We will no longer be constrained by voice or data, but will live in a converged world where voice, data and video work together to offer consumers the ultimate digital experience. At Samsung, we hope that by creating the future together, consumers will embrace the next stage in our information revolution.”
Samsung’s path toward the Two-Way Video Communication Age centers around five key fields — Capture, Display, Store, Process and Connection. Specifically, Samsung has introduced:
• Capture: Advanced mobile handsets including a 5-megapixel camera phone and the DuoCam, a 5.25 megapixel camera-camcorder combo.
• Display: Premium 80-inch PDP and 57-inch TFT-LCD TVs.
• Storage: The world’s most advanced and highest-capacity flash memory devices, along with the industry’s highest density SDRAM devices.
• Process: The world’s fastest mobile CPU and DNIe chip for digital TVs.
• Connection: A Digital Integrator supporting everything from business to entertainment combining camera, video recording, e-mail, MP3 player and speakerphone. Plus the new SCH-B100 mobile phone that supports satellite Digital Multimedia Broadcast (DMB) services.
An important ingredient in Samsung’s ability to generate market leading products is speed. At Samsung it takes an average of five months to move from concept to delivery of new ideas. Six years ago it took Samsung 14 months to complete the same development cycle. Much of the credit for Samsung’s corporate agility rests with Vice Chairman Yun. His stated focus within Samsung is implementing structural reform, management innovation and improving supply chain management and quality. This has led to the development of a “speed and simplicity” supply chain model which Samsung’s management asserts has ensured that its services and products are customer oriented and has been integral in growing Samsung’s brand image.
Yun feels that Samsung’s strong brand image will enable it to make the next move of emphasizing quality over quantity in its product focus. “Before digital electronics, competitors had to have a research and development foundation on which to develop products. Now, digital technology is so widely available that a company cannot possibly compete at the lower end of the market,” Yun said. “Today, we take the next step in our premium brand vision by welcoming and inviting you to experience a new era — the era of the High Life. We want each and every person to experience the High Life — where technology enables people to have a more enriched and fulfilling experience.”
Those are bold words especially when it’s noted that the majority of the world’s consumers are still living an analog life. Samsung recognizes that many consumers are suffering from digital device anxiety and the company is working to overcome product complexities and create true digital convergence.
Byoungyoul Yu, senior vice president and general manager, Digital Video Division, Digital Media Business, Samsung, admitted that customer convenience and acceptance of the networking of digital devices has become an issue for all electronics companies. Developing unified digital technology standards will not be easy, but Yu stated that Samsung was moving in that direction.
“At Samsung Electronics to improve customer convenience, we already have standards such as Anynet and XHT,” he said. “With Anynet, digital devices in the home such as the TV or video, that usually use separate remote controls for operation, will all operate with the same remote control. The extension of that is the Extendable Home Theater (XHT) which is a technology that will allow the control of any digital entertainment device, Samsung or others, from just one remote control. Samsung is working with other companies in the hope that those companies will accept this standard and enable ideal consumer convenience in the operation of digital devices.”
While Yu is constantly exposed to an environment where digital is the norm, he is well aware that not everyone has so eagerly embraced the digital age. “Digital devices often seem difficult for people to use, especially the older generation. It really is not whether the product is difficult or easy to use. The term ‘digital’ is just not as familiar to the older generation as to the younger generation,” Yu remarked. “When we make certain products, especially ones for family use, we pay special attention to the older generation. For instance, we try to make the display screen bigger and try to make the characters larger and we try to reduce the number of features on a product so that it will be easier for the older generation to use. Such convergence features as ‘Anynet’ also make it possible for people to operate many devices with just one remote control and everyone finds this much easier. I believe it is the responsibility of Samsung and all producers of digital devices to make it easier for consumers to use such products.”
Digital as a concept was a given at the Global Roadshow. What was somewhat of a concern was Samsung’s move to concentrate on premium digital products. Distributors from many developing countries had reservations on how this strategy would affect their ability to promote Samsung products in geographies where consumers have modest incomes. Byung-Woo Lee, president, Middle East & Africa (MEA), Samsung Electronics, discussed the issue.
“The Middle East has a mix of income ranges. In some of the wealthier countries selling premium products will be simply a matter of the right marketing strategies,” Lee said. “Even in the less wealthy countries there will be a niche market interested in Samsung products. I believe it is up to us to develop and create the market. For example, Samsung will stop selling CRT TVs next year and only sell flat screen models. Actually, we can do that because the market is already interested in flat screen TVs. People already prefer them. It is only at the low end that CRT TVs are still selling. With our focus on quality over quantity we really need to move consumers to the flat screen TVs which have many advantages compared to CRT.”
Samsung is doing well in the region. According to Lee, in 2003 Samsung’s Middle East and Africa (MEA) revenues were $2 billion. The current projection for 2004 in MEA is that Samsung will achieve revenue of $2.7 billion across the total of Samsung’s product categories. In MEA, Samsung’s largest revenue earning markets are Iran followed by South Africa and then Saudi Arabia. Samsung has production facilities in Iran, Pakistan, Egypt and Algeria and is hoping to build more regional operations.
“We are looking at perhaps starting a production facility in Saudi Arabia,” Lee advised, “but I don’t want to give out any more details until those talks are further along. We have the belief that the place of manufacture is important for strategic, logistic and perhaps regulatory reasons but that in the end, no matter where a Samsung product is manufactured, Samsung guarantees its products will be of the highest quality.”
Samsung would also like to bring its award-winning mobile computers to the Middle East but that will take a while longer. “Selling is not easy with a complex product such as the notebooks. Before we start selling these products we need infrastructure and that includes a specialized call center which we don’t have in the Middle East,” said Lee. “We are hoping that by the middle of next year we can have the appropriate infrastructure in place and start selling notebooks most likely in the UAE first and then perhaps Bahrain.”
In Saudi Arabia, Lee said Samsung is No. 1 in Projection TVs and LCD monitors. Their televisions and camcorders are also doing well. He anticipates that Samsung’s MP3 players, which will be launched in the Kingdom this month, especially those at the high end, will also be popular.
As for the difficulties Samsung is having getting their mobile handsets into the local market, Lee said: “Of course we are not happy that many of our handsets cannot be distributed legally in the Saudi market. The fact is that the Kingdom’s telecom regulator has already awarded the rights for 3G in the Kingdom and doing 3G requires a telephone with a camera. This means that soon the Saudi government will have to accept the entry of camera phones. Handsets with cameras are a worldwide trend.”
The next year will be a busy one for Lee as he works with Samsung’s MEA team to promote the concept of Samsung as a premium brand. From which companies does he hope to take market share?
“I consider our primary competitors to be Sony for digital media and Nokia for mobile devices,” Lee said. “I believe that our technology, service and price are in reality superior to those companies. The only area where we must work for improvement is brand image.”
To get that job done Lee will probably follow the advice of Samsung’s vice chairman.
“Last year the brand value of Samsung Electronics was $13.2 billion so we were ranked 21st worldwide,” said Yun. “As our ranking becomes higher and higher we will have to work even harder to take it further. Another important thing is to satisfy the customer. The evaluation of the customer is extremely important and we cannot artificially change that. Artificially we cannot say that Samsung is ranked No. 10. What we can do is to continue to produce high quality products that satisfy and meet the needs of consumers and also make some contribution to the society of countries so that we can receive the trust and confidence of consumers. That is our goal and it is the most important way to improve brand value.”
In Saudi Arabia, Samsung is already very interested in increasing its level of community participation. In December, Samsung will be sponsoring the Al-Bir Charity Marathon in Jeddah. This is the largest marathon in the Kingdom and Samsung will be providing logistic, financial and technical support to the event.
“We want to do more than just give money and have our logo displayed at the marathon,” said Taesang Park, manager, Samsung Electronics, Saudi Arabia. “We really want to help the event to operate in a more professional manner and raise the profile of the marathon so it attracts more notice and consequently earns more for the needy.”
Community supporter, consumer advocate, digital convergence leader — Samsung Electronics is aiming high. But what else could be expected of a company that plans to create the future?
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