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  • Posts Tagged ‘smartphone’

    SmartWatch Wars: How the Apple Watch May be an Opportunity for Asia’s Tech Giants

    March 14th, 2015  by  Asia-Pacific Global Research Group - Jasper Kim

    im-Watch-Smartwatch
     
    Apple unveiled its much anticipated line of Apple watches recently with a price range of $349 to $17,000. I believe they also revealed a weakness in the company. This is a weakness that Asian companies would be less prone to, such as Samsung (South Korea) and Xiaomi (China). In full disclosure I’ve owned several iPhones, an iPad, and an iPod. I loved these products because they were innovative, fun, easy-to-use, well-built and stylish. In my opinion, the combination of those aspects were done better than anyone else out there. Even though the iPhone is relatively expensive, I still felt that I got a lot of value out of the product. The iPhone eliminated the need for a separate camera, GPS unit, music player, desk calendar, etc.
     
    As word came out about the watch last year (2014), I felt that it had potential. I was leaning towards buying the least expensive version, realizing that there is probably little initial additional functionality over the iPhone other than the health functions. At this point, it seemed like more of a toy than a need to have, but I was willing to give it a try and open to further possibilities, as I suspect others may also have shared this same consumer sentiment.
     
    Hearing that the most expensive version of the Apple Watch would start at $10,000–and rise to $17,000–I thought the article I was reading had a typo. Now that this pricing is confirmed, it seems exorbinant on several levels.
    • This signaled that Apple is now willing to move away from products that provide true value. All of the value in a smart watch itself can be obtained at the base price of $349. Beyond that you are paying for jewelry. At a price level above $10,000 you have a vast array of world renowned watches to choose from.
    • What rational consumer would be willing to buy a $10,000+ Apple Watch over a Rolex? A Rolex is truly expensive, but one could argue that it’s not really that expensive at all because it will last for decades. The Apple Watch on the other hand will be the fastest depreciating watch of its price range as the technology advances will quickly make it obsolete.
    • If consumers buy the $10,000 watch, it’s akin to burning money for attention. The fact that someone would rather buy the $10,000 Apple Watch than use the extra money for a wise investment or charitable donation speaks volumes, in my view, of such consumer’s character.
    • Do I want to be associated with the “conspicuous consumption” individual who buys the $10,000+ Apple Watch?
     
    It almost seems to me that the $10,000+ Apple Watch is a cry for recognition amongst the Apple design team. After Steve Jobs died, there was a fear that Apple might not be able to innovate. Jony Ive thereafter became more prominent and powerful within the company. Rumor has it that Ive was the one who pushed for the $10,000+ watch. The $10,000+ watch is where the design shines and the technology takes a backseat. After all, the smart watch is the same across all models, so you’re just paying for the extra materials and design of the band at $10,000+. This, then, makes Apple not only a technology company but also a fashion company.
     
    Jony Ive is unquestionably a great designer, but this $10,000+ watch is an unnecessary distraction for the company. What made Apple work before was the teamwork: great vision, great technology, great execution, and great design. We can’t all be great at everything, that’s why we need a pool of diverse talents to make a company great. It appears to me that those at Apple with a talent for business sense and strategy were overridden by those at Apple that want to now be part fashion company. This, I believe, has the potential to create a rift within Apple’s employee and customer base.
     
    A better strategy for Apple would have been to go down the pyramid instead of up the pyramid. The top of the pyramid contains the wealthiest consumers and the bottom of the pyramid the poorest. When the iPhone C came out, some were expecting this would be Apple’s offering to the developing world, but it wasn’t. Most of the consumers in the world are in the bottom section of the pyramid. To go there is more difficult than to go up the pyramid, but the potential rewards are greater. This is a hole in Apple’s offerings that is recognized and being filled by other players in technology–including Samsung and Xiaomi–in the smart phone space, as well as even Google and Facebook.
     
    Corporations have the mandate to maximize shareholder value, and at first glance it could appear that extravagantly priced products may add value. However, if you deviate from what your stakeholders (in this case employees and customers) expect from you, those stakeholders may go elsewhere, thereby reducing shareholder value. The $10,000+ Apple Watch isn’t worth that risk. The weakness that the $10,000+ watch exposed is that there must have been a struggle within Apple as to whether or not to enter the luxury goods market. It’s not inconceivable, based on personal speculation, that Jony Ive may even have threatened to leave if not allowed to pursue his personal vision. This has the potential to fracture the company. Asian companies such as Samsung and Xiaomi are less subject to this issue because of Asia’s relatively consensus-based corporate culture. Asian companies are thus more likely to work cohesively as a corporate unit and follow the lead of senior management. This represents a rare yet tangible opportunity for many of Asia’s tech giants.
     
     
    Brian Sullivan is an Assistant Professor of Finance at Hallym University in South Korea where he teaches courses on finance and business. He has an MBA in Finance from The University of Chicago Booth School of Business and a BA in Economics from The University of California at Berkeley.
     
     

    If interested in how Asia-Pacific Global Research Group’s consultancy and training expertise can help your organization, CONTACT US HERE.
     
    The views expressed in this blog are not endorsed, directly or indirectly, by the Asia-Pacific Global Research Group
     
     

    Samsung Electronic’s future growth strategy: what to do when screens can’t get any bigger?

    June 21st, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    Jasper Kim of Asia-Pacific Global Research Group is featured in this BBC tech report today as 1 of 4 expert commentators on Samsung’s future growth strategy (below is a short excerpt of the full article found HERE):
     
    In 2011 (in an earlier BBC tech report), I warned the rise of China’s emerging electronics companies was a tangible threat to the world’s bestselling smartphone maker.
     
    As we have seen, emerging tech titans from the mainland, such as Huawei and ZTE, have since made gains. It should serve as a wake-up call to the South Korean firm.
     
    Samsung’s recent string of smartphone successes have largely, but not entirely, been linked to the relatively straightforward formula of offering consumers larger screen sizes with an American-based operating system – certainly evolutionary but not exactly revolutionary on Samsung’s part.
     
    But assuming that we are now at the limits of how big one-hand display screen sizes can get, the focus will shift more towards price points and brand familiarity than a “bigger is better” mentality.
     
    Samsung’s ultra-aggressive and expensive marketing strategy was a key factor in its brand awareness outside of South Korea.
     
    But to capture the billion-plus mainland Chinese market, homegrown firms, such as Huawei and ZTE won’t need to expend the same amount of marketing resources to gain brand familiarity and consumer trust.
     
    Chinese firms will also be naturally positioned to know exactly what its domestic consumer base wants before any other foreign tech firm, including the likes of Samsung and Apple.
     
    Samsung should not rest on its laurels. This week’s introduction of Huawei’s Ascend P6 – the world’s “slimmest” smartphone – is just the beginning of future innovative products to follow.
     
    If Samsung fails to pay heed, the rise of such Chinese tech firms could be tied to the decline of Samsung’s market share in China and beyond.
          
     

     

     

     

    Samsung Electronics – Silicon Valley “innovation centers” (6 Things to Know)

    February 12th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    (The questions below are partially based on a related interview today with a local Korean broadcaster)
     
    1) What is the motivation behind Samsung’s innovation centers?
     
    By creating innovation centers–Samsung Strategy and Innovation Center (SSIC), which includes a $100 million Samsung Catalyst Fund–Samsung’s objective is to secure the best talent in Silicon Valley. This may say signal increased confidence that it has the ways and means to go head-to-head with the likes of Apple right in Apple’s own backyard.
     
    2) Will Samsung earn a title, “an innovator,” by creating innovation centers? How soon would it happen?
     
    Samsung has publicly stated that its aspiration is not to be a game-changing “innovator.” Instead, it believes that its best strategy is to be a “fast follower.” This means, first, canvassing existing market demand and micro/mega-trends from region to region, and second, adapting technology to in essence “wrap around” such existing market demand. Steve Jobs, Apple’s former CEO, famously stated that “It’s not the customer’s job to know what they want.” Samsung has a polar opposite view–that it’s Samsung’s job to give the customer what they know they want. So far, both have been effective, with the momentum favoring Samsung than Apple in recent weeks, based on Apple’s falling share prices.
     
    3) Why is Samsung looking to create them outside Korea (in Silicon Valley) and not Korea?
     
    Samsung could be creating innovation centers outside of Korea for one of two reasons. First, it could be simply adding to its already existing creative capital as an offensive strategy. Or second, Samsung could be seeking creative talent that it views as lacking onshore in South Korea as a defensive strategy. What is sure is that South Korea’s human capital, and the education of such domestic human capital, does not promote or incentivize thinking outside the box (as of this writing, although efforts and trends may change going forward). As one example, Apple’s “think different” acclaimed marketing slogan in the U.S. cultural context is viewed as a potential good thing, but in South Korea, it is viewed generally as a net negative.
     
    4) Does this mean that Korea lacks creative class talent?
     
    This could certainly be the case. An added consideration is that the corporate culture of South Korea generally has a “do as you’re told” modus operandi. That is, to do your assignment, but not to question it. This is a bit ironic given the nature of the industry, high tech, which has generally been predicated on questioning the status quo and creating and thinking in an unorthodox and different way. One could say that such approach is a Western-Socratic mindset, not entirely fitting of South Korea. Only time and results will tell.
     
    5) Why does Samsung plan to increase investment in the U.S.?
     
    Samsung is essentially trying to maximize it’s ROI (return on investment) by creating a fund for future tech start-ups in the U.S. Silicon Valley has a population of approximately 3 million, whereby 17,000 new start-ups are created every year, which are then followed by 12,000 failures of such start-ups. Samsung may now be understanding that, much like many Silicon Valley VCs, it may take both a good eye of the next big thing, patience, mentoring, and a “wait for the mega home run” mindset by trying to find the next Facebook (although the next big thing most likely is a known unknown start-up that may appear at any given moment).
     
    6) What does this say about Samsung’s global strategy?
     
    Samsung is asserting itself on the global stage through its aggressive Silicon Valley strategy. But according to one source from the KITA, Samsung Electronics and other similarly situated firms have only a few years before it loses its competitive advantage to Chinese firms (which will, in essence, be the next wave of dominant high tech firms).