Samsung DigitAll: Everyone’s buying

Three years ago, I was shopping around for a 17″ flatscreen monitor, and the dingy little PC shop in London I went to would only offer a Samsung. I was leery at first – after all, wasn’t Samsung that company that made those unremarkable OEM products that adorn the nation’s Walmarts? However, the price and featureset seemed reasonable, so I purchased it.

“Intellectual assets will determine a company’s value in the 21st century. The age when companies simply sell products is over. In the new era, enterprises have to sell their corporate philosophy and culture. An enterprise’s most vital assets lie in its design and other creative capacities.”

– Kook Hyun Chung, VP Samsung Corporate Design

Today, I’m typing out this blog entry with the same monitor. Silverlotus and her parents liked it so much, they each bought the same model too. (At night, sometimes Silverlotus’s and my monitor’s blinking lights sync up, like a binary electrical parade). We now also own Samsung cellphones.

Since then, Samsung products have vanished from Walmart. Morpheus’s kung fu-kicking rebels are seen pulling Samsung cellphones from their Prada suits in The Matrix Reloaded, replacing the Nokias they carried in The Matrix. Samsung is now in the #3 spot for cellphones, biting at the heels of Motorola. Samsung’s CEO is now bullishing gunning for #1, claiming they’ll beat Nokia in handset sales by 2010. Bell offers seven Samsungs. That’s 1/3 of their postpaid lineup.

You can see why if you look at the Samsung a680, a Bell Mobility exclusive phone to be released in the fall. Compare it with Mobility’s current Nokia flagship, the 6225:

Nokia 6225 Samsung a680
Still camera Video camera /w flash and exposure options
4,000 colour LCD screen 65,000 colour TFT screen
16-chord polyphonic sound 32-chord polyphonic sound
Programmable voice-dialing Intelligent voice and digit dialing that learns how you talk

The a680 is also lighter, smaller, and has a slightly bigger screen than the Nokia. When you squeeze or shake it, the Samsung phone doesn’t squeak or rattle. The GUI is colourful and animated. The Nokia’s GUI is unchanged from 1999.

As for the Moto, the founder of the “Six Sigma” quality movement, well: the last set of Motorola phones that Telus and Bell offered were so poorly made (their antennas would snap off) rumour has it this is the reason why Telus and Bell hasn’t offered a new Motorola phone in three years.

So what is their secret sauce? This is my assessment:

  1. Making their stuff not suck. They dropped their value-brand items and went upmarket. “They were no longer just another garden variety Asian electronics maker,” Arik Johnson reported. “Their overall quality went up.” In 2003, the Yankee Group found that an average Samsung phone’s selling price was $190 versus Motorola’s $146 and Nokia’s $154. They’ve focused on quality features at a higher (yet reasonable) price point, which translated to a handsome 18% gross profit margin. Nokia has a 20% margin.
  2. Building a unified brand identity. The Samsung DigitAll “Everyone’s invited” brand is present on all of their consumers products worldwide. They used to retain 55 ad agencies, but now they carry only one. Exclusive phone deals with phone carriers makes their phones even more unique. A vigorous focus on industrial design led them to offer 140 models last year, each one slightly different from the other.
  3. Vertical integrated structure. Samsung still makes RAM chips and LCDs. In fact, they are the #2 manufacturer of semiconductors, behind Intel. Making their parts in-house means they remain self-sufficient; Samsung was able to weather pandemic part shortages and keep production levels up.