As expected, Samsung replaced the head of its mobile business, J.K. Shin, with a longtime Samsung executive who helped usher in the company's mobile payments and enterprise software efforts, a move that analysts believe may signal a shift within Samsung away from hardware innovations and toward new offerings based on software and services.
Every year the South Korean family that owns Samsung engages in a management reshuffling meant to keep the company's leadership and strategy fresh. As part of this year's overhaul, Samsung replaced J.K. Shin with D.J. Koh, a 54-year-old executive who joined the company in 1984 and who has worked in research and development in Samsung's mobile business since around 2007. According to Bloomberg, which refers to D.J. Koh as Koh Dong Jin, the executive helped to develop both Samsung Knox and Samsung Pay, the company's mobile enterprise software and its mobile payment offering, respectively.
According to sources who spoke with the Wall Street Journal, D.J. Koh is a well-liked, soft-spoken executive who is known as hardworking and direct.
Although J.K. Shin will reportedly remain as a co-chief executive of Samsung, D.J. Koh will take over operations of Samsung's mobile business, which is focused mainly on the company's smartphone efforts but includes sales of networking equipment and other mobile products. The business is key for the South Korean conglomerate: Samsung's electronics business, which stretches from TVs to laptops to mobile phones, is the company's biggest division, and Samsung's mobile business is the largest unit within Samsung Electronics.
J.K. Shin took over Samsung's mobile business in 2011 and is credited with guiding the company's massive growth in the sector -- Samsung today is the world's largest vendor of smartphones -- but recently the company has been under pressure due to increasing competition from Apple (NASDAQ: AAPL), Huawei, Xiaomi and others across markets including the United States and China. Specifically, as the WSJ points out, J.K. Shin fumbled the launch of Samsung's latest high-end smartphone, the Galaxy S6, by building too many versions of the device without a curved screen while shoppers flocked to the S6 Edge that sported a curved screen. Samsung rebounded slightly in the third quarter, however, on the strength of a bigger version of the Galaxy S6 Edge and other models.
According to research firm Strategy Analytics, the global smartphone market grew 10 percent annually in the third quarter to 354 million units. Samsung grew its smartphone shipments 6 percent during the period to 83.8 million units. The firm said Samsung commanded 23.7 percent of the global smartphone market in the third quarter, ahead of rival Apple's 13.6 percent. According to the firm, Huawei came in third in the global smartphone market with 7.5 percent market share.
However, according to a report from Canaccord Genuity analyst Michael Walkley, Apple gobbled up 94 percent of smartphone industry profits in the third quarter. Samsung, meantime, captured 11 percent of the industry's total profits. (Apple and Samsung technically made up 105 percent of industry profits because all the other major vendors posted losses.)
Based on D.J. Koh's experience with Samsung Knox and Pay, analysts believe his appointment to the head of Samsung's mobile business could signal the company's plans to focus on software and services rather than hardware innovations like curved screens. "The change shows that just the new cycle of hardware offerings won't do much to revive growth. The new leader will try to boost software power and foster new innovations," Greg Roh, an analyst at HMC Investment Securities, told Bloomberg.
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