Samsung bullish on high-end, LTE Advanced smartphones, but puts focus on software

Samsung Electronics remains confident the smartphone market will continue to grow, especially at the high end of devices with LTE Advances capabilities. However, the company, which is the world leader by volume in handset and smartphone shipments, acknowledged that it could do better in software and also signaled that it is open to a wider array of acquisitions.

The South Korean conglomerate, which held its first analyst briefing with top management since 2005, believes the high-end smartphone market may grow stronger than expectations, but did not specify its upbeat forecast, according to Reuters.

Samsung Electronics co-CEO JK Shin, who runs the company's mobile business, said "the expansion of new LTE services, including LTE Advanced, will be the key growth driver," according to ZDNet. "Until 2017, we expect an annual average growth of near 30 percent in the LTE smartphone market, reaching 680 million units."

Shin said that by 2017, half of all phones sold will be LTE phones. However, like other handset makers that have been achieving success in Western smartphone markets, Samsung is looking to emerging markets for continued growth, Shin said. "We estimate that more than 3 billion people are currently using feature phones. So there is still huge demand to upgrade from feature phones to smartphones, and this will be a major market growth driver for the upcoming years," he said. "In the future, we expect emerging markets will drive smartphone volume growth. That is already happening, China and India are the first- and third-largest smartphone markets."

The company will sell more than 100 million units of its Galaxy S and Note series handsets combined this year, Shin said at the conference, according to Bloomberg.  

Samsung shipped an estimated 120.1 million total handsets in the third quarter, which was good for a 28.87 percent global market share, according to research firm Strategy Analytics. The research firm estimated that 88.4 million of those handsets were smartphones, which gave Samsung a 35.2 percent global smartphone market share in the quarter (Samsung has stopped releasing quarterly handset and smartphone shipment totals, leading analysts to estimate the totals).

Samsung Vice Chairman Kwon Oh-hyun answered a question at the conference about how Samsung could become as proficient in software as it is in hardware by launching into a discussion of the Boston Red Sox's recent World Series championship, according to the Wall Street Journal. He said the Red Sox were the top team in batting but were only mediocre in pitching, "but they still won the world championship." He effectively said nobody can be equally strong in batting and in pitching--a reference to Samsung's efforts to improve its software business as it continues to shore up its hardware efforts. However, Kwon noted that "even though we're doing the software business, we're not as good as we are in hardware."

Evidence of Samsung's focus on software is prevalent. Samsung welcomed application developers to San Francisco late last month for its first-ever Developer Conference, and though the company spent a great deal of time talking up its prowess in the Android smartphone and tablet markets, it also reportedly quietly made push for another platform it supports: Tizen.

During the company's analyst briefing, Samsung CFO Lee Sang Hoon said the company will be more aggressive in making deals after spending about $1 billion investing in 14 companies. "We will expand our mergers-and-acquisitions strategy beyond a few target areas to pursue opportunities across a wide range of fields," Lee said. The company wants to "enhance the competitive edge of our current businesses and capture new chances for future growth," he said.

According to ZDNet, Lee noted the company has been gradually moving its investment away from existing markets to "new market creation," and will "continue this strategy in the near future."

For more:
- see this Bloomberg article
- see this Reuters article
- see this ZDNet article
- see this separate ZDNet article
- see this WSJ article (sub. req.)
- see this separate WSJ article (sub. req.)
- see this The Verge article

Related Articles:
Samsung quietly makes push for Tizen at its developer conference
Samsung posts another record profit in Q3, but warns of tough smartphone competition
Samsung seeks software prowess via new startup accelerator
Samsung's new CEO puts spotlight on software

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