`Samsung will not shift to low-priced phones

By Hwang Si-young

Korea Herald correspondent

BARCELONA, Spain - Samsung Electronics president Choi Gee-sung yesterday made it clear that his company will not shift to the production of low-priced mobile phones. Instead, it will introduce new models specifically targeted at emerging markets where demand for such handsets is high.

Choi flatly denied speculation that Samsung, faced with declining profit margins and wireless operators` increasing demand for low-end models, might introduce low-priced phones.

Articulating the electronics maker`s premium strategy with greater emphasis - Choi, who took the helm of the mobile phone sector earlier this year - cited the example of Gucci, which once changed its direction to the mid- and low-price segment but ended up alienating its regular customers.

"I can say this much, that I will not let the mobile-phone sector`s profit margin fall below the double-digit level. As the company cut costs in TV manufacturing by over 800 billion won ($857 million) last year when I headed the digital media business, likewise the handset sector can make drastic cost reductions as well," Choi told reporters on the eve of the 3GSM World Congress 2007 at Hotel Juan Carlos in Barcelona, Spain.

"As a result of that, we will be able to double our revenue growth this year compared to a year ago, based on technology leadership and an innovative spirit. It might sound presumptuous but watch how our handset sector will perform for the next year."

Samsung aims to sell 130 million handsets and achieve a double-digit operating profit ratio from its handset sector this year. The sales target is up 13 percent from last year`s 118 million units.

The company`s portion of 3G handsets is expected to exceed 18.2 million units this year, up from last year`s combined sales of 7 million. The figure translates into about 14 percent of this year`s total handset sales target.

Shoring up its premium strategy with the Ultra Edition II and all-touch-enabled, HSDPA-capable Ultra Smart F700 - the Ultra Smart F700 allows users to download data at a speed of 7.2 Mbps. Samsung said it is more than ready to tap a growing 3G demand. This year`s global 3G handset market is forecast to grow to 165 million units.

"Marketing and design are as essential as technology itself. The mobile-phone sector will be more market consumer-oriented," Choi said.

Analysts often compare Choi to his predecessor Lee Ki-tae, who headed Samsung`s mobile phone sector for the past seven years, in that he is more like a businessperson than a tech wiz.

He also stressed Samsung would more actively consider the wants of wireless operators - when about 70 percent of the global handset supply is controlled by operators, and the remaining 30 percent by direct consumers in the open market.

Choi said, "we will launch a new, innovative product in the second half of this year," but it remains to be seen whether the new model will be truly innovative as Apple`s first handset, the iPhone, rather than an incremental technological change.

(stephanie@heraldm.com)