Samsung Electronics president/CEO D.J. Oh reviewed market conditions as the industry enters the crunch period of the fourth quarter, and is confident about his company’s performance and standing in the marketplace.
Oh spoke with TWICE recently, a couple of weeks after Samsung reported record revenue of $18.2 billion for the third quarter corporately and an operating profit on a consolidated basis of $2.98 billion, a 93 percent increase over the previous quarter. (See TWICE, Oct. 22, p. 85.) Oh expects Samsung to have a record-setting year.
Aside from the positives, Oh, like many other top CE executives, is concerned about consumer confidence during this fourth quarter and price pressure at retail. “As you know well, the consumer confidence has dropped recently. That is our biggest concern … as we face the holiday season,” he said.
When asked about deep discounting at retail for CE products, Oh commented, “It is also a concern since nobody wants such a situation” during the holiday season, “and no one wants that to last.”
As for flat-panel TV, and whether or not price cuts like those the industry experienced last holiday season will happen this year, Oh said, “Last year, only one or two brands made a bold move [that] really shocked” the industry. “This year everyone is expecting [price moves] and preparing for it.”
But Oh added, “I’m not sure if [last year’s] dramatic drop will be made. I don’t think it can be much because how much can you squeeze the price” since there have been several price cuts since last year? And he stated, “There are only few vendors [with enough resources] who can make a profit in this atmosphere in TV.”
In that vein, Oh said that Samsung is a “unique company” since it manufactures many key core components and that some of its main competitors such as “Apple, Sony and Nokia buy from us. If we do well” with the Samsung brand, “that’s fine, but if they do well, we still do well.”
A Samsung veteran for almost 30 years who has been in his current role with Samsung Electronics since 2001, Oh noted, “You must be a global player to be successful in consumer electronics. Without having solid foundation in the U.S. it will be difficult to survive in the marketplace.” And he noted that in other areas of the world, notably Europe, Samsung’s profile is even higher than in the United States.
At the turn of the century, Samsung Electronics in the United States took advantage of the industry’s conversion from analog to digital technology, “a change that gave us an opportunity … that was not possible with analog. In the digital era we could,” Oh stated.
He remarked that years ago, Samsung used to be “best in class and priced for lower. Now we are a first-tier brand. We changed our way of thinking and began to act like a market leader, so Samsung is there, a technology-driven company, still looking forward.”
Part of looking forward is analyzing how one’s brand is perceived in the marketplace. Oh commented that in the changing environment where low-end suppliers can come in with competitive products at rock-bottom prices, “What does a brand mean? It used to mean that if you had a stable, solid brand that it would provide profits and market share. Today it happens, but not exactly that way.”
Which is why Oh said it is important that Samsung continues to focus on technology, innovative branding efforts like Four Seasons of Hope, Hope For Education and its designation as the official HDTV of the NFL, and product design. “In the LCD area we are the leader in design. All of a sudden everyone is imitating us.”
Oh, who has seen all the changes in the industry and in the Samsung brand in his role with the company since 2001, noted, “The biggest change from 2001 to 2007 is that our employees mentality. We have plenty of high-energy employees … with plenty of new, innovative ideas on how to continue meet and overcome other challenges will face in this industry.”