Even 18 years later, Venugopal Dhoot can’t help break into a wide smile while recounting Samsung’s entry into India. It was December 1995. Samsung—then a name hardly recognised in the world—came into India via a 51-49 joint venture with Dhoot’s Videocon Industries. That’s when Samsung’s then chairman made a startling announcement: by 2010 the Korean firm would be the No. 1 electronics and appliances company in India. It was such an audacious claim from a fledgling equipment supplier, recalls Dhoot, that many in the audience openly tittered. “Nobody believed them then,” says Dhoot, chairman of Videocon Industries, “we never thought they’d achieve this position.”
Two decades later, India—and the world—is fully aware of the rampaging ambitions of this South Korean chaebol. On its own now, the unlisted Samsung India is India’s top electronics and appliances firm today. The $187.8-billion parent has also become one of the world’s most prominent names in technology. It’s nothing short of a hallyu, or Korean wave. In mobile phones, tablets and flat panel TVs, Samsung is the undisputed leader not just in India, but across the world. Now, after dispatching global giants like Nokia and Sony, Samsung is taking on the mighty Apple.
In a world obsessed with mobile phones and tablets, this is the defining marketing battle. If America reacted to the ‘Made in Japan’ tag in the 1980s, ‘Samsung vs Apple’ is the latest battle cry. Though Samsung officials deny it, most of the company’s arsenal in this field continue to be pointed towards products from the Cupertino (Apple HQ) in California. Like the Galaxy smartphone series to take on the iPhone, the Galaxy tablets to counter the iPad and now the new Series 9 notebooks which echo many features that Apple’s famed MacBook range shows off. “Samsung is like a steamroller—you know it’s coming and you better get out of the way,” says Prasanto K. Roy, technical analyst and editorial advisor, Cybermedia. “That said, it’s quite unlike Apple which has come from nowhere and set trends with its products.”
Nokia may have bounced back with its brilliant Lumia series of smartphones, but Samsung has already cemented its place as market leader in all mobile categories—a heterogeneous field from smartphones to tablets. Others like LG, BlackBerry and Motorola as well as Indian companies like Micromax have single-digit or less market share in India. And yes, that includes Apple, which says it “doesn’t comment on competition and business matters, so unfortunately an interview won’t be possible”.
Samsung’s India success is a reflection of its global triumph (it’s also now world No. 1 in mobile phones sales). For many firms like Apple, it is also a crucial equipment supplier. Earlier this month, Samsung made a strong statement with its new Galaxy S4 which tries to prove a point or two to Apple’s iPhone 5. Samsung left no one guessing on what it was up to. First, the phone was launched in the US, on Apple’s turf, and the launch itself was designed like a Broadway show, creating the same euphoria every Apple launch event under Steve Jobs did. And it had a similar reaction, complete with night-long queues of people at the stores to grab the first set of S4s.
Imagination is all, an Apple showroom in the capital. (Photograph by Sanjay Rawat)
Now remember, this comes after the legal battle Samsung had with Apple over patent infringement. Apple had won that round (In a popular internet hoax, Samsung is supposed to have sent over $1.05 billion to Apple’s headquarters in 30 trucks filled with 5 cent coins). Of course, Apple will respond, at its own pace, with yet another of its game-changing devices, but for now, the moment belongs to Samsung. As Rafat Ali, founder of paidContent, puts it aptly in a recent tweet, “That moment when you realise Samsung phones have surpassed the number of iPhones in your regular subway car....”
Experts, though, feel much of Samsung’s strength is derived from Apple—and that it is lucky that post-Steve Jobs, the company may no longer have the edge it was known for. “No other company’s been able to internalise Apple’s industry-leading practices more than Samsung and that has clearly worked to their advantage,” says Deepak Kumar, former IDC analyst and founder of analytics firm Businessandmarket.net. “Samsung’s products show a telling influence of Apple’s range, best demonstrated through the difference in their products of the pre-iPhone era and after. Samsung’s edge, however, comes from practising the processes and techniques with a perfectionist’s approach, again an Apple thing,” he adds. Whatever it is, consumers are biting: As Lydia Polgreen, New York Times Johannesburg bureau chief, tweeted recently: “Definitely worth looking for deals on Samsung packages (she tweets from her iPhone).”
Showgirls at the Galaxy S4 launch in Radio City Music Hall, New York, Mar 14, 2013. (Photograph by AFP, From Outlook 08 April 2013)
A few decades ago, Korean companies believed in the ancient management concept of koenchanayo which meant ‘that’s good enough’—just a shade better than India’s famous chalta hai culture. The Japanese, in contrast, practised kaizen or ‘constant improvement’. Samsung has combined the best of both—and has looked at not what is good today but on a long-term and sustained basis. They want to achieve technological excellence through organic and inorganic growth and they want to do it palli-palli (quickly). That’s how Samsung India has overtaken Sony to become No. 1 in panel TVs (LCD/LED); it comes a respectable No. 2 in white goods like refrigerators, split Acs, and washing machines (tellingly, Korean compatriot LG is No. 1 in all these categories).
A crucial part of Samsung’s strategy was also creating a strong, larger-than-life brand. Says Anshul Gupta, principal analyst with Gartner, “In today’s time, innovation is not enough. It’s not just the wow factor. You have to have stickiness to products. That’s what they have done by creating visibility in mature and emerging markets with affordable products along with great brand positioning.” Last year, it was one of the big sponsors of the London Olympics and the torch relay and emerged as the biggest brand gainer. According to industry estimates, in 2012, Samsung increased its mobile phone ad spend by over 400 per cent over the previous year in the US which, in value terms, was 20 per cent more than what Apple spent. The gratification was near-instant. In the Consumer Electronics Show (CES), the biggest annual exposition of technology, in Las Vegas in January, Samsung got more eyeballs than any other, including Apple.
But in a world dominated by the innovations of Apple and the marketing genius of Steve Jobs, even Samsung’s admirers are a bit sceptical about giving it full marks for its successes. Vinod Dham, venture capitalist and globally considered the father of the Pentium chip, feels that even though Samsung is a technology giant, much of its strength comes from Apple and its partners like Google. “Samsung continues to imitate Apple...even its recently launched new mobile phone Galaxy S4 is not a compellingly innovative product and is unlikely to be a turning point of new innovation from Samsung,” he says.
Samsung India’s contribution to the MNC’s global revenues is just about 4 per cent (the figure is naturally much higher for mobile phones and tablets). Like many other companies, India forms an important link in Samsung’s overall scheme of things. For instance, India’s three R&D centres are instrumental in developing many key features in Samsung products, especially mobiles. In fact, the Indian R&D operations are one of Samsung’s 15 R&D operations globally and the biggest outside South Korea. “Our R&D here contributes significantly to new product development worldwide...they are developing some key features of Samsung’s new global products from here,” says Samsung India CEO B.D. Park. The India centre develops, for instance, internet applications for Galaxy phones across the world and also touch features.
So what’s next at Samsung’s R&D factory? Well, it’s looking at investing in areas like healthcare and lifesciences to take it to the next hallyu. But for now, all eyes are still set on who takes the honours in the Samsung vs Apple battle.
Edited to correct the erroneous reference to the internet hoax
Forget Samsung vs Apple (Two Moon to a Galaxy, Apr 8), whatever happened to our Indian electronic brands? In the late ’80s and early ’90s, we had some wonderful brands, fiercely competitive and with innovative marketing campaigns. Most of them have died out, a few barely survive. They could have become LGs and Samsungs if not for our outdated state policies and fourth-world infrastructure.
Prasanth Nambiar, Melbourne
Samsung has done a few things well, like bringing the latest technology within reach of everyone, price brackets for every type of customer, a tactical fusion of Japanese and Chinese technology etc. That said, aping others’ technology is not healthy in the long run. Samsung and Apple have their day in the sun now, but who knows what the new dawn brings?
M.Y. Shariff, Chennai
The quotes in the piece are amusing and very revealing. So Samsung are the doers and the Indians are left in the passive head clerk/analyst role. This is what casteism does to a country. Mind you, it’s not a bad strategy. Samsung’s energies will eventually dissipate and they will start making mistakes. Meanwhile, the analysts can simply move on.
M.K. Saini, Delhi
If Apple is for the classes, Samsung is both for the masses and the classes.
K.C. Kumar, Bangalore
As usual, the Modi articles get 100s of comments/responses and an actually relevant(globally) article doesn't!
If Samsung can indeed achieve this 'shaking up' of the behemoth that is Apple, it will be a slap, nah, slaps are fruity, it will be a full blooded left hook right on the jaw of every single protectionist around the world that screams about the perils of globalisation.
10 D DL Narayan I agree with your post.
I would like to add that thogh we are good
atanalytical thinking, we lack the killing instinct
or say the business acumen shown by Koreans.
I remember the present airtel chief telling that he failed
in business and went to korea there he saw the push buttontelephone
decades ago. He purchased a couple of them, carried home, manufactured
and entered in telcom business.Idea and vision and ofcourseffort.
@ Prashant - Sorry, it is okay to be nostalgic for the good old times but brands like Onida, Videocon, Dyanora and BPL lacked the technological capability to design even rudimentary TV sets. They merely imported kits from abroad and assembled them. Tata had a presence in this space with a brand called Nelco (run by Ratan Tata before he took over the Tata empire). They were little more than traders and never had it in them to take on the MNC's. Regarding the sound quality of the modern superslim LED TV's, it has to be necessarily substandard given the space constraints (down-firing tiny speakers) which is why connecting them to a decent Home Theatre system is a must.
The fact remains that India lacks a proper industrial infrastructure and a conducive political environment. Unless we have a world class infrastructure and the requisite political will, we cannot dream of emulating the Korean chaebols who have taken on iconic brands like Apple and Sony.
Dhaba Tandoori chicken is Tandoori Chicken (there is no H1N1 at 100degC) whereas KFC is not Chicken at all...
The example was improper but the message was conveyed...
While Samsung may beat Apple, it will remain a copy of great design pioneered by Apple. Assuming that they are ahead of Apple, where will they get the next design from?
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