Samsung In Bloom

Now that the World Cup tournament is over in Seoul, the round soccer ball has been replaced as the city's most inescapable emblem by the elliptical logo of South Korea's largest company: Samsung. During the tournament, its liquid-crystal-display TVs dotted public parks, drawing hundreds of soccer fans to watch the games. On the drive from Inchon airport to the city, billboard after billboard features the company's latest gadgets. Downtown, Samsung stores are everywhere, and wandering through one of them recently was Lee Ji Hyun. The 30-year-old teacher, like many Seoulites, has wallpapered her world with Samsung computers, televisions and mobile telephones. "We cannot escape from Samsung," she says. "It has digitized our life."

But across the ocean, in the world's most fertile soil for the consumer-electronics market--the United States--the story is quite different. Unless you work near the new 65-square-foot Samsung billboard in Times Square, the brand probably floats invisibly in the soup of Asian electronics manufacturers: Toshiba, Fujitsu, Matsushita... To most Americans, Sony is the only name that stands out. Jeff Curtis, a shopper from Cleveland, owns a Sony boombox, stereo and Walkman. He says Sony's products "are consistently cool." He likes his Samsung mobile phone, but he remains skeptical about the brand's quality: "When I hear 'Samsung'," he says, "I still think 'cheapo knockoff electronics brand'.''

Samsung hopes to change Curtis's perception to something more like the royal reputation it enjoys at home. Sure, it earned its poor standing in America in the '80s and early '90s, when it sold low-cost and often unreliable TVs and microwaves in discount chains. But recently, after years of working to improve quality and design, Samsung execs have sounded a new battle cry. They want to triple their $24.4 billion in worldwide revenues and, by 2005, surpass Sony, which made $58.5 billion last year. It's a bold goal, particularly at a time when most companies are trying to stay afloat amid a slumping market and sluggish economy. But it's backed by a $50 million U.S. advertising campaign this year (tag line: "DigitAll: Everyone's Invited") and a host of new gadgets. The company calls them "Wow products," and they're designed to elevate Samsung in the same way the Trinitron TV and the Walkman planted Sony in consumers' minds in the '7 0s and '80s.

Samsung is already the world's largest maker of computer memory chips, flat-panel monitors and color TVs. Recently it leapt over Germany's Siemens to become the third largest maker of mobile-phone handsets, behind Nokia and Motorola. Dae Je Chin, a 17-year company veteran and the head of the digital-media division of Samsung Electronics, wants to take advantage of Samsung's manufacturing prowess in these far-flung fields to produce devices that straddle traditional technology categories. "We have to combine computers, consumer electronics and communications as Koreans mix their rice with vegetables and meats," he says. Last year he called all 17 global marketing chiefs together in Korea and told them he wanted one such flagship item from each of them that would make consumers drool--and associate Samsung with cool, futuristic technology.

The company will introduce the Wow products in the States later this year. They include the NEXiO--a handheld computer with a five-inch screen that runs Windows, connects to the Internet and runs a spreadsheet and a word processor. The NEXiO was introduced in Korea early this year and has been selling 5,000 units a month. Bill Gates already owns one--but ironically the device will face competition from Microsoft's own Tablet PC, among others. The I500, code-named Bluechip, is also promising. It's a Palm-mobile-phone device in the style of Samsung's popular I300 and Kyocera Smartphone. But this one's the same size as a regular mobile. You don't even see the Palm-style graffiti pad until you crack open the clamshell handset. Finally, there's the Zipel, an oddly named refrigerator that has a 15-inch flat-panel touch screen tucked into the door. The display can be used to surf the Net and send or receive e-mail.

Generating some "wows" in America would cap a remarkable turnaround for the company. Though last year was among the worst ever for the consumer-electronics industry, Samsung Electronics recorded healthy profits of $2.2 billion. That's more than a 1,000 percent boost from the early 1990s, when it sold appliances to companies like RCA and GE, which slapped their logos on them and reaped most of the profits. The transformation was sparked by Kun Hee Lee, chairman of the 64-year-old Samsung Group, a Korean chaebol (conglomerate) that builds and sells a wide range of products, including skyscrapers, life insurance and bidets. In the early '90s, Lee correctly predicted that Chinese manufacturers would soon be able to produce cheaper electronics than Korean factories. He directed Samsung to sell better wares at higher prices and gathered execs together to smash their low-quality products with hammers while they shouted, "Change everything but your wife and children!" Today, 70 percent of Samsung products carry its logo.

The next step is to make that logo instantly recognizable in America. To that end, this year Samsung spent $15 million to sponsor the Winter Olympics. It also replaced dozens of advertising agencies with one--New York's Foote, Cone & Belding--to give a consistent look and feel to all its ads. One recent spot features father-and-son soccer fans racing not to the game, but to a public square to watch it on a Samsung TV.

But even if the ads and the Net-connected refrigerators score with U.S. consumers, Samsung Electronics faces other obstacles in its quest to unseat Sony. Samsung was listed as the 42d most valuable brand last year by the consultancy Interbrand, rising faster through the ranks than any company except Starbucks. But Sony, which declined to comment on Samsung, remained well ahead at No. 20. And Samsung still doesn't have strong entries in the few consumer-electronics segments that are doing well in today's torpid economy, like digital cameras. Though Samsung sells its popular laptops in Europe, there are no immediate plans to market them in the United States, forcing retailers like CompUSA to look elsewhere for those products.

Despite all the marketing firepower Samsung is concentrating on the United States, its best weapons in the fight to overtake Sony are converts like Tanner Goss, a salesman at a Best Buy in Silverdale, Wash. Goss bought his CD-DVD player from Samsung and advises customers to do so as well. "Samsung is competitive now because the price is so low and the quality is pretty good," he says. But only about half take his advice, and the rest retreat into the comfortable arms of Sony. For Samsung, it's a start.

Samsung In Bloom | News