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Samsung CEO focusing on low-end phones

Samsung Electronics' CEO Joong-Yong Yun says the company is focusing on low-end phones because the demand for low-end is much stronger than for high-end. Does this mean that the mobile phone has stopped adding functionality?


Joong-Yong Yun, chief executive of Samsung Electronics, told the Sunday Telegraph that Samsung is currently focusing on low-end handsets and handsets for emerging markets, rather than the high-end phones capable of video downloads and 3G Internet access.

The reason is simple: people aren’t buying high-end phones. Malcolm Penn, CEO of analysts Future Horizons, recently warned that there was a large and increasing inventory of high-end phones but a shortage at the low-end.

So, is the mobile phone running out of an ability to add functions? For the mobile phone industry it is a devastating question because it has always been supposed that the mobile phone was the core of an electronic system that would be almost infinitely expandable by adding new functions.

Funnily enough the electronic watch pioneers of the 1970s thought the same thing. Although it never happened for the electronic watch, which remained strictly a device for telling the time, it did happen for the PC which had a great, 20+ year run, of adding functionality, until it slumped into commoditization around its current set of functions a few years ago.

So is the mobile phones’ functionality going to stop at voice calls, texting and photography?

Despite all the talk of TV to the mobile, HSDPA and HSUPA high-speed access, of the mobile becoming an electronic payment device and even becoming a ‘personal electronic assistant’, the industry may have to come to terms with the fact that people mainly want mobile phones just for talking.

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Comments (2)

Nimalan:

Dear Mr. Manners,
I follow the mobile industry and I have come across numerous instances and examples where Samsung has categorically refrained from entering the lower end.

These comments come therefore as a surprise.. This goes against Samsung's core strategy.

WOuld like to know your comments based on your experience whehter Samsung is consciously targetting the low end or is it just an offhand statement by the CEO.

Looking forward to hearing from you

Thanks and Regards

NImalan
India

David Manners:

Thanks Nimalan. The comments were made by the Samsung Electronics CEO in an interview with the UK Sunday Telegraph.

They reflect what Carlo Bozotti, CEO of STMicroelectronics and Kevin March, CFO of Texas Instruments said earlier this week that the product mix in the cellphone space is shifting towards the low-end.

This impacted the wireless margins of both ST and TI in Q4.

Bozotti says his long-term strategy is to support the high-end - obviously because that's where the greatest amount of silicon is used.

He reckons the current trend is a 'glitch'. But, while this trend continues, he has to reflect the fact that his customers want low-end chip-sets.

He says he's not changing his strategy to go for the high-end stuff long-term, but, for now, he has to do what the market wants, and that goes for Samsung and TI too.

TI's Kevin March says he doesn't know when the trend to the low-end will stop, but suggests it will only stop when new applications which users want are found.

Best wishes

David

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