Samsung Forecasts Gains From 1x

By Joseph Palenchar On Dec 3 2001 - 8:00am

Samsung Telecommunications forecasts continued gains for its U.S. and worldwide handset sales, in part because of the transition to 2.5G and 3G technologies and to the continuing transition from analog in the United States.

Samsung will leverage the market changes with its own quick transition to CDMA 2000 1x handsets, executives said during a briefing. With the launch of new products in the first and second quarters, "by mid next year, you'll probably see only 1x products from Samsung" in Samsung's CDMA selection, said Pete Skarzynski, handset sales and marketing VP for Samsung Telecom's U.S. operation.

In 2.5G technology, the company will begin shipping its first GSM/GPRS handset this month. Opening orders on CDMA 1x and GPRS handsets are "significant," Skarzynski said.

Other factors pointing to Samsung's continued U.S. growth include a product strategy that emphasizes the "most value at a price point" and a marketing strategy that emphasizes close "strong and deep partnerships" with carriers, Skarzynski said. On top of that, Samsung is continuing a promotion campaign that includes consumers, who in turn demand Samsung products from retailers and carriers.

Changes in the works for Samsung include tighter relationships with select retailers and promotions based on Samsung's Olympic sponsorship, said Randy Smith, senior director of handset marketing and business development. Samsung is also considering sports marketing programs and entertainment event sponsorship. "Carriers and retailers are interested [in both]," Smith said.

(For Samsung's view on changing carrier and retail strategies, see page 24.)

To keep the product line fresh, Samsung will have shipped 15 new products for the 12 months ending in December, said Muzibul Kahn, senior director of handset product management and engineering in the United States.

The 15 products include Samsung's first gpsOne phone, the CDMA trimode N300 phone available through Sprint. A second gpsOne model, the clamshell A400, will ship to Sprint at the end of December or early January.

Also in Samsung's product plans: a smart phone based on Microsoft's Stinger platform in 2002. It's not certain whether the first model will be GSM- or CDMA-based, Skarzynski said.

Dual-technology GSM/TDMA handsets are under consideration, he added.

As for a PDA phone incorporating Microsoft's PocketPC platform, Kahn hinted that a model could be available next year.

Samsung's first 1x phones will be the trimode N350 flip phone and its nonflip N370 counterpart, each weighing 3.85 ounces. In trials, each has delivered an average throughput of 110kbps. One is due at the end of the year in limited quantities, with quantity shipments beginning in the first quarter, said Skarzynski. They'll likely retail for about $200, Smith added.

Another 1x model will be the dual-band, dual-mode A450 clamshell, weighing 3.4 ounces.

Samsung's first U.S. GSM/GPRS phone, the 2.9-ounce Q105, ships in November to Voicestream, which will likely retail for about $200, Smith said. It features PIM functions, 128x128 screen, and maximum download speed of 57.6kbps. Worldwide, only Motorola and Samsung are shipping GPRS handsets, he noted.

Products are only one part of Samsung's growth strategy, Skarzynski said.

The company's U.S. sales have grown because Samsung has been "moving from a manufacturing-centric to a marketing-centric company," Skarzynski said. That's part of parent Samsung Electronics' effort to "change its image via value-added products," he explained.

Growth will also come from an expanded list of carrier customers. Already a significant supplier to Sprint, Samsung added Verizon in the previous quarter and Voicestream during this quarter. As a result, Skarzynski expects "significant new growth for us."

Unlike some competitors, added Smith, Samsung promotes to consumers, not just to carriers. "We created a groundswell" with major retailers such as RadioShack and Circuit City, "and they demanded our products from carriers," Smith said of Samsung's consumer promotion campaigns.

To cement its relationship with carriers and retailers, Samsung tags all national print and TV ads with the name of a customer, he said. To strengthen its retail relationships, Samsung develops exclusive customized programs with such retailers as Best Buy, Circuit City and RadioShack to "supplement a carrier program," Smith said. "It's icing on the national-rate-plan-promotion cake."

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