Going mobile

JH Park, president at Samsung Gulf Electronics explains the global giant’s succesful Middle East business strategy

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By  Stuart Wilson Published  November 21, 2006

|~|JHPMaingt200.jpg|~|JH Park, president at Samsung Gulf Electronics|~|GITEX TIMES: Samsung has a massive IT and consumer electronics portfolio. What trends are shaping market development? JH PARK: I think that there is still a great deal happening in terms of convergence and this has to be one of the major themes at this year’s GITEX. It was not that long ago that consumers and business users alike carried around an array of products with them — a camera, a mobile phone, a music player and even a camcorder. That was the time when people had to make sure that they had plenty of pockets. Now we are really moving towards a stage through convergence and digital technology where one device can do all these functions. This is product convergence and it goes hand in hand with what is happening in terms of mobility. The lines are blurring between the home and the office and this is changing the way that people work in the digital age. GT: Do all the different devices and different networks in different locations now work together as they should? JHP: That is a big question and it is something that the industry is addressing. There are still some people that view the home as a private area and keep it totally separate from the office, which is the place where they go to work. I think that convergence and the arrival of the digital home mean that these boundaries are now starting to blur. The fact is that you can now be at home and have access to everything that you would have available in the office — the applications, the data and even e-mail. This has made it possible for people to effectively work from home. You also have the opportunity to work on the move while travelling now. Products such as Samsung’s ultra mobile notebook PC allow people to extend their work environment even further. Now what all this means is that people are starting to separate work from home not by place but by time. They have clear work time and clear leisure time. What is happening in terms of the digital lifestyle and convergence is actually changing human habits. GT: The ultra mobile PCs are on the Samsung stand at GITEX this year but they are still not being sold in this market. Is this policy set to change? JHP: There is significant interest in Samsung notebooks and when we will start to sell them in this region. Yes, the ultra mobile Samsung PCs are on display this week and what we are looking to do is judge the market reaction to them. We want to see how excited retailers, distributors, resellers and the customers themselves are about these products. We will collect this information and deliver it to Samsung headquarters and then decide on the next step. As someone working in the regional market I can tell you that I want to see these products available here as early as possible. GT: There is significant buzz around push e-mail solutions this year. Does Samsung have the products and the partnerships to compete in this space? JHP: Yes, we do have a range of mobile phones with push e-mail functionality. This is a technology that is very important for business users and we are looking at the best way to target this segment of the market. At a regional level we are currently looking at how we can cooperate with Microsoft to create a strong go-to-market model. We are in discussions with Microsoft at the moment to see how we move forwards with this. Microsoft is incredibly strong in the corporate market and we have a strong retail presence. I believe that this collaboration will benefit both companies. I can’t give an exact timeframe on when this will all be worked out but the initial discussions are underway. GT: Given your strength in the IT, audio-visual and consumer electronics sector, how exciting is the opportunity around the digital home and what progress has Samsung made in this region? JHP: There are so many ways to approach the digital home market and we are making sure that we are well positioned for the big projects coming up. We tend to prefer to talk to governments and also big developers to look at the levels of cooperation that can be developed. In terms of the audio-visual products and also the home appliances we are always looking at what kind of connectivity should be incorporated. This is definitely an exciting market in the Middle East and one that has a great deal of potential. GT: Samsung recently restructured its IT sales model in the Middle East, giving the Samsung Gulf team a regional sales and marketing remit. How successful has that change been? JHP: The change only happened at the start of October so it is still quite new. However, in the last two months it has become clear that this was a positive step for the company. It allows us to form regional distribution agreements where necessary. I think that in six months time we will really start to see the benefits. GT: How well is Samsung’s printer business faring in the Middle East market? JHP: We are introducing one of the smallest colour laser printers at GITEX this week and that is something that we are very excited about. There is still some debate over whether a consumer really needs a colour laser printer in the home but this specific offering makes it an attractive option for them to consider. Overall, the printer business is performing well. We know that we are up against some strong rivals in this market segment and understand that it will take time to establish Samsung’s printer business in the Middle East. It could take five years but what we want to do is make the product line-up more complete. One of Samsung’s strengths is its marketing and we know that with the proper investments we will be able to take on the competition. In fact, the competition is not that important — it is what we do as Samsung that really matters. GT: How well has the mobile phone business performed for Samsung Gulf in the last 12 months? JHP: In the retail segment our sales continue to grow strongly. It is always difficult to talk numbers because of the presence of the parallel market in the UAE. Many of the other vendors are focusing heavily on selling phones that go into this parallel market and that means that they are recording huge volume growth. What we have done is focus on reducing the amount of product sold locally that ends up in the parallel channel. Our volumes continue to rise but the structural changes that we have made to the business are much more important. Two years ago, up to 80% of the products sold into the channel were ending up as parallel product. That figure is now les than 20%. People could look at the numbers and get confused and think that Samsung is not growing its mobile phone business as fast as competitors. We are growing where it really matters in the genuine local retail market. Samsung Gulf has successfully changed its structure from a mixed approach that dealt with the parallel market and the retail market to one focused purely on the retail sector. As a result, we have decreased the amount of parallel product in the market and also seen our market share of the real retail sector increase. GT: Where was this parallel product eventually going and why did it make sense to stop it? JHP: A lot of the product sold by Samsung Gulf was ending up in the African market and also in other countries in the Middle East. This created confusion at a regional level and made it difficult for Samsung businesses in these destination countries. So we took the decision to stop this business. GT: Samsung is a headline sponsor of the Asian Games taking place in Qatar next month. How important is this event for the company? JHP: This is very important to Samsung’s reputation in the Middle East market. You’re talking about a massive sporting event that is probably the third biggest behind the World Cup and the Olympics. The fact that the event is happening in the Middle East this time around is a clear positive for Samsung Gulf. We expect this event to further enhance Samsung’s brand positioning in the wider region. GT: How excited are you by the long-term growth potential for Samsung Gulf? JHP: I think it will be an interesting next 12 months for Samsung Gulf. The industry now changes so rapidly — especially in the consumer electronics space — and there is still a strong competitive environment. In the UAE many of the competitors are already present but you cannot say the same about them in other countries in the Middle East. I think they will look to develop operations in these other countries and as they do we have to make sure that we stay ahead of them. GT: Is it easy for Samsung to stay ahead of its rivals in such a fast-moving industry? JHP: In the UAE I can safely say that we have maintained a strong leadership position in 2006. The right people, the right products and also the right partners — that is what Samsung Gulf is all about.||**||

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