Tue, Jan 05, 2016 - Page 15 News List

Samsung warns of a challenging year, intense competition

Bloomberg

Samsung Electronics Co expects international economic growth to remain weak this year and urged employees to brainstorm ways to handle intensifying competition in an industry where software and platforms are eclipsing hardware.

Company vice chairman and co-chief executive officer Kwon Oh-hyun said products including smartphones, televisions and memory chips are likely to face escalated competition this year. Innovative business models are weakening traditional hardware values and workers must adapt to maintain leadership in an industry changing at its fastest pace ever, he said.

“The territories of industries are collapsing,” Kwon said. “We have to compete in a new way that we’ve never experienced in the past.”

Executives have preached the need to focus on software for years. Yet Korea’s largest listed company and the world’s largest smartphone maker has lagged Apple Inc in developing mobile-friendly software and a unique platform that can lock in users.

“The competition landscape is changing to software and platforms, so we need to build a new system and competence,” Kwon said in a speech distributed to the media.

In a signal of its newfound priorities, Samsung replaced the head of its phone operations last month with an executive, Koh Dong-jin, who helped create its mobile payment and security platforms.

Koh is expected to turn around a division that still leads the world in smartphone sales, yet has lost favor with investors.

Samsung lost more than US$8 billion in market value last year as sales of high-end S6 and Note 5 devices sputtered against new models from Apple and Chinese makers. Its shares posted a third straight annual decline last year, dropping 5.1 percent.

The company is expected to release its preliminary fourth-quarter earnings on Friday. Net income in 2014 is projected to be the lowest profit in four years, analyst estimates show.

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