Samsung points to marketing, not copying, as reason for smartphone turnaround

Samsung Electronics called witnesses in its patent-infringement trial against Apple (NASDAQ:AAPL) who testified that it was an intensive and significant shift in marketing and hardware innovation that helped Samsung become the world's largest smartphone maker. The witnesses were seeking to rebut claims by Apple's lawyers that it was only through copying Apple's innovations that Samsung was able to secure its strong place in the market.

Todd Pendleton, the chief marketing officer for Samsung's American division, testified that when he joined Samsung in 2011 from Nike, he did not even know that the company made smartphones, which meant Samsung had branding issues.

"I think people knew Samsung for televisions," Pendleton said, according to the New York Times. "But in terms of smartphones, there was no recognition for what our product was or what it stood for."

At that time, before the company underwent a marketing "paradigm shift," it was the No. 4 U.S. smartphone maker, behind Apple, HTC and BlackBerry (NASDAQ:BBRY). Pendleton testified that the company developed a "real-time marketing" approach of "attaching our brand to cultural moments," according to Re/code.

Samsung has since poured billions of dollars into marketing it mobile devices, and eventually launched a marketing campaign around the "Next Big Thing," which made fun of the iPhone while promoting Samsung devices. By the first quarter of 2012 Samsung overtook Nokia (NYSE:NOK) as the world's largest handset maker by shipment volumes. And in 2012, sales of Samsung's Galaxy S III surpassed the iPhone for a brief period. When asked whether Samsung plotted to surpass Apple, Pendleton said: "Our goals at Samsung are always to be No. 1 at everything we do. To beat everyone."

Also testifying for Samsung was former U.S. mobile division CEO Dale Sohn, who said Samsung shifted from marketing its phones with carriers to marketing its own brand.

"We really made a remarkable turnaround," Sohn said, according to the Wall Street Journal, noting that the company's U.S. market share grew to more than 30 percent in 2012 from around 10 percent in 2010. Sohn is now an executive adviser at Samsung's headquarters in South Korea.

However, while Sohn downplayed Apple's influence on Samsung's strategy, Apple's lawyers showed the courtroom an internal memo Sohn wrote in an April 2012 internal presentation: "Beating Apple is no longer merely an objective. It is our survival strategy."

Apple's witnesses have taken the stand to demonstrate how difficult it was to develop the iPhone before Samsung allegedly copied it, as well as the value of the patents at issue. One of them concerns the slide-to-unlock feature from Apple's iOS.

When asked if Samsung copied that feature, Samsung's senior UI designer, Youngmi Kim, who has worked on user experience strategy on the Samsung design team since 2004, said "Absolutely not," according to Re/code.

"If we were to work on the same thing as Apple, that would not give us any advantage in terms of differentiating our products, so that would not make any sense," Kim said, speaking through a translator. 

The patent on slide-to-unlock is one of five over which Apple has sued Samsung. Apple is seeking $2.2 billion in damages, a figure Samsung highly disputes. Samsung denies its products infringe on the patents and also says the patents at issue are invalid. Samsung has also countersued Apple for infringing on two of its patents. The trial is expected to last several more weeks.

For more:
- see this NYT article
- see this WSJ article (sub. req.)
- see this The Verge article
- see this Re/code article
- see this Bloomberg article

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