Posted by: Ihlwan Moon on November 7, 2008
Samsung Electronics recorded an impressive performance in the U.S in the third quarter of this year, seizing the bragging right to be the No.1 brand in the world’s largest mobile phone market. Researcher Strategy Analytics said on Nov. 7 South Korea’s Samsung overtook Motorola in the American company’s home turf for the first time in history in the three months to September. During the period, Samsung grabbed a market share of 22.4% in the U.S., against 21.1% for Motorola and 20.5% for LG Electronics of Korea.
There are two main factors for the rise of Samsung. The biggest reason, of course, is ever-weakening strength of Motorola’s mobile phone business. Another major driver of Samsung’s growth is its aggressive marketing, which has been fueled by a weak Korean currency. The won that traded at 1,324 to the dollar late on Friday has lost 29% of its value against the dollar so far this year to allow the company to cut prices of its products in export markets without hurting profitability.
The big question is if Samsung could maintain its double-digit profitability once the currency regains its stability. Many economists predict the won will probably go back to between 1,100 and 1,200 to the greenback next year, when Korea is expected to report a current account surplus after an estimated deficit of around $10 billion this year. “I think Samsung is making a high-risk, high-return bet,” says handset analyst Thomas Kang at Strategy Analytics.
Samsung’s aggressive marketing has paid off at least in the short-term. Its global sales hit 51.8 million mobile phones in the third quarter, a quarterly record and up 13% from the previous quarter. That’s almost triple the pace of growth for the global handset market, which grew 5%. Samsung officials have said the cash-rich company aims to increase its market share by keeping investing in R&D and marketing while its financially-troubled rivals are cutting back.