Back in 1996, when South Korea's Samsung Electronics Co. still had a reputation as a business that undercut big Japanese brands with cheaper knockoffs, it took a daring plunge into an unproven mobile-phone technology. Skeptics thought the new CDMA wireless standard, developed by Qualcomm Inc. (QCOM) for the North American market, had little chance of surviving against the prevailing GSM technology used in the rest of the world. But Samsung went to town with snazzy, appealing CDMA phones -- and once it gained a foothold there clawed its way up in GSM handsets as well. "The CDMA gamble served Samsung as a springboard to vault into a global cell-phone force," says Choi Dong June, senior managing director at Appeal Telecom Co., a Korean affiliate of Motorola Inc. (MOT).
The CDMA experience is ingrained in the minds of Samsung executives. They learned that there's more money to be made from innovating and setting the pace than from churning out me-too products. Little wonder, then, that the company is now obsessed with embracing new technologies, ranging from chips and image-processing to wireless. "The profitability gap between technology leaders and followers is immense," says Samsung Senior Vice-President Chang Il Hyung. "We are prepared to sleep with enemies to jointly push for new industry standards."
Better fluff up the pillows, because Samsung is applying the same lesson in consumer electronics. Once again, the company is turning to wireless, banking on a future of everywhere, all-the-time connectivity, from schemes that allow couch potatoes to zap digital movies around the house to technologies for broadcasting television signals to mobile phones. Pouring on R&D and then pushing for its inventions to be adopted across the industry should keep Samsung a step ahead of rivals. "Samsung seems to be hitting the right chord with consumers," says Yang Ho Chull, managing director at Morgan Stanley International (MWD) in Seoul.
Take the new wireless technology known as Ultrawideband. It's an efficient way to stream high-quality video from PCs, set-top boxes, or DVD players to giant screens across the room or down the hall. Samsung is already way ahead of rivals such as Sony and Philips in this emerging field, thanks to its gutsy decision to use the first Ultrawideband chips on the market, made by Motorola. At the Las Vegas Consumer Electronics Show in January, Samsung dazzled crowds by showing wireless transmission of three different HDTV streams from a media server to giant screens hung like paintings on the wall. "With this technology, we want to repeat our CDMA success," says Jo Jae Moon, head of the Connectivity Lab at Samsung's Digital Media Group. The pitfall is that first may not be best. Intel Corp. (INTC) and Texas Instruments Inc. (TXN) are pushing rival Ultrawideband technology that could steal the show from Motorola. If that happens, however, Samsung says it would make a quick switch.
Samsung faces less risk with another project being launched in its Korean home base. In July, the company plans to deliver a mobile phone that doubles as a television, offering 39 channels of movies, news, and information. The combo will use Samsung's new digital multimedia broadcasting (DMB) technology, with high-quality video beamed from a communications satellite. The TV service will be offered at monthly fees of $10 to $12. "This has the potential to drive sales of new mobile phones," says Koo Bon Jun, an electronics analyst at Salomon Smith Barney (C).
Another innovation first pushed by Samsung is technology that gives broadband Internet access to people on the go. The project, which is being developed jointly by Samsung and the state-financed Electronics & Telecommunications Research Institute (ETRI), will offer Internet service at speeds up to 50 megabits per second for Net surfers cruising in vehicles at up to 60 kilometers per hour. "This will mark another milestone for wireless Internet," says Ahn Jee Hwan, head of ETRI's Wireless System Research Group. In a bid to make the technology a global standard, Samsung is cooperating with Intel to make the scheme compatible with WiMax, an emerging technique that can send data up to 50 km through the air.
Wireless at home, abroad, and in speeding trains. Samsung's technology experiment continues. By Moon Ihlwan in Seoul