Can Samsung Emulate Nokia?

Posted by: Ihlwan Moon on November 28, 2007

Could Samsung Electronics follow the footsteps of Nokia? The Korean company certainly hopes so at least in emerging markets, where the Finnish company is making handsome profits by selling cheap phones. Samsung, which until last year largely focused on the higher-end of the mobile phone market, has pushed hard recently to increase its presence in the lower-end segment.

So far, Samsung has been hitting sweet spots in its new strategy. In the July-September period, Samsung increased its global market share to 14.5% from 12.2% a year earlier. On Nov. 28, it revised upward its sales projection for all of this year to 160 million units from 150 million. Next year, Samsung seeks to increase its sales by 25%, double the pace of forecast global industry growth, to expand its global share by 3-4 percentage points..

What’s more important is the Korean company’s policy to maintain a double-digit profit margin. Samsung execs say their efforts of selling more affordable phones in Asia, eastern Europe, the Middle East and Africa won’t come at the expense of profitability. Samsung’s phone division had a profit margin of 12% in the third quarter, way off 22.6% for Nokia but not bad against Motorola’s loss in the handset business. Both Nokia and Samsung have benefited from Motorola’s weakness, but Samsung’s real test will come next year, when Motorola is predicting a comeback.

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