Television's biggest star is fighting for our attention

A leading light at the electronics firm tells Stephen Pritchard how its manufacturing sets standards that its marketing now follows
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The Independent Online

The mega-plasma is part of a strategy devised by the South Korean manufacturer to demonstrate it has the technical and design prowess to take on the likes of Sony and Philips as a high-end brand. Better products and better prices are enabling companies such as Samsung and its Korean rival LG to put pressure on more established brands. Last week, Sony announced that it expected to make its first loss since 1994, estimated at Y10bn (£50m). Howard Stringer, Sony's chief executive, acknowledged that the future of his company depended on staying ahead of its Korean and Chinese rivals.

Choi's 102in screen certainly impressed the crowds at the recent IFA electronics fair in Berlin. But for Choi, the real achievement lies in taking Samsung to the number-one position, by revenue, in the global market for TV sets. This marks one of a number of milestones for the manufacturer, which has also taken the number-three slot in the European mobile phone market. It is winning a reputation for innovation in PCs, and was recently first to market with a laptop boasting a 19in display.

Raising awareness, however, will take time, as Choi acknowledges: "There is a brand gap, but our brand is fast improving and we are technologically active, bringing new products to market.

"The marketing will then catch up to support that [tech-nology]. Consumers are starting to become more and more accepting of Samsung as a brand leader."

The company has invested heavily in its brand in the past few years. It was a key sponsor of the 2004 Athens Olympics, and became Chelsea Football Club's shirt sponsor in a record- breaking deal. Yet despite the heavy investment, Choi gives the impression that Samsung remains an engineering-led company at heart.

"Our first investment is in research and development," he says. "The second is in manufacturing, and logistics to deliver [products] on time. The third part is marketing, like the alliance with Chelsea. A lot of fans are starting to know our brand, and we have to build on those emotional ties."

There is nothing emotional about the company's stance on R&D and manufacturing. While rivals concentrate on design and outsource manufacturing, Samsung is committed to making not just its products but also a large percentage of the components.

It is helped by its strength in the memory chip market, and its status as the world's largest supplier of flat- panel screens. Samsung is also a key component supplier for Microsoft's forthcoming Xbox 360 games console. It employs 27,000 engineers and spends more than $5bn (£2.8bn) a year on R&D.

Unusually, Samsung is committed to several display technologies, including conventional cathode-ray- tube (CRT) TVs, albeit with flat screens, projection TVs, plasma and liquid crystal displays. According to Choi, Samsung does not want to favour one technology over another; it also wants to offer products at a range of prices to suit different markets.

"We are revisiting conventional TVs, giving them a new life as a sexy product," he says. Not everyone wants or can afford a high-end plasma screen, and Choi is looking to consumers who are not in that bracket to buy from Samsung. As a consequence, the company's engineers have developed a CRT TV that is 30 per cent thinner than conventional models.

Samsung has, however, made tough decisions about older devices. It no longer produces video recorders, a market in which it had operated since 1977. It is also moving away from analogue equipment.

Yet within the digital arena, Choi concedes that Samsung will have to innovate if it is to continue to sell products such as DVD players; lesser-known brands now sell for under €40 (£27). One way in which the company is doing this is by investing in high-definition (HD) TV technology.

There is a standards battle going on for high-definition DVD disks, and this is hampering consumer acceptance. Samsung believes dual-format players could be a way forward, but until the industry agrees on formats, take-up of high-definition TV will be driven by take-up of HD camcorders, and by broadcasters. The Discovery Channel is broadcasting much of its programming in HD in the US, and will launch HD services later this year in Europe.

The high-definition standard, along with larger screen sizes, might be enough to persuade consumers to upgrade their TVs, but Samsung will have to work hard to convince buyers, especially technology-driven early adopters, to consider its brand.

Choi rejects the idea of opening Samsung stores in Europe, along the lines of Apple's retail format or Sony Centres, even though the company has outlets in South Korea.

"Manufacturing is the difference," says Choi. "We invest continuously in core technologies and core components. Those two elements will make us competitive and lead the trends. If we are dependent on somebody else's technologies, how can we lead the trends?"

He admits that Samsung's R&D and engineering spending comes at a price. But he is prepared to play the long game.

"That investment has given us an extra burden. But we believe in the long run we will lead the market. Our mission is to continue to invest."