Samsung Electronics yesterday launched its new handset equipped with an AM-OLED display with much media hype, announcing an ambitious sales target.

However, market watchers said it remains to be seen whether the pricey phone, which costs nearly 900,000 won ($704), will attract consumers who are already suffering from the weak economy.

Seeking to drive the growth of the nascent AM-OLED market, Samsung aims to sell at least 500,000 units of the Haptic AM-OLED this year, Shin Jong-kyun, executive vice president of Samsung, said at the launch.

He said the company plans to introduce additional AM-OLED phone models and to increase their shipments here as well as overseas.

Samsung touts an AM-OLED display as a "dream display," saying it produces better picture quality and consumes less energy than a traditional liquid crystal display. "AM-OLED" is an acronym for active-matrix organic light-emitting diode.



The Haptic AM-OLED will allow users to enjoy music, game, video and other multimedia contents on a wide, high-resolution 3.5-inch screen, the company said.

Despite the display`s benefits, its expensive price is a major hurdle for its takeoff, market watchers say. Although the 900,000 won phone can be purchased at lower prices with subsidies, it is still expensive given that the market is flooded with free or subsidized, inexpensive handsets.

Samsung`s home rival, LG Electronics, expressed doubts whether an AM-OLED phone is worth paying for, citing its expensive price tag.

"We will not compete in the AM-OLED market for the time being." Ahn Skott, president of LG`s mobile communications unit, said at a press conference on June 11.

He cited a survey showing that consumers put less importance on the size and image quality of a display than other criteria in mobile devices. The price, design and brand topped the list for consumers` selection criteria for mobile phones.

Addressing the AM-OLED display`s hefty price, Samsung said it expects demand to grow quickly which will drive prices down.

"The AM OLED display will create new demand... Driven by demand, price issues will be soon overcome," Shin said.

The phone will be sold via Korea`s three mobile operators - SK Telecom, KT and LG Telecom.

Meanwhile, he said the company will be able to achieve their overall sales target of 200 million handsets, a 20 percent market share and a double-digit operating profit margin this year.

"I believe that we will be able to achieve our triple-two goal," Shin said.

He expected Samsung to increase shipments in the second half, citing improving macroeconomic conditions. He also said the company "fared well" in the second quarter of this year despite the challenging market environment.

Shin noted that the global handset market posted minus growth this year for the first time in 15 years as the global economic downturn adversely impacted demand for mobile phones. The handset market slumped 15 percent in the first quarter, and 11 percent in the second quarter, after achieving annual double-digit growth for the past 15 years, he added.

Shin declined to comment on Samsung`s strategy for its upcoming application store, saying that the company will announce its AppStore plan "in the near future."

Samsung plans to launch an online marketplace for applications in the third quarter of this year, hoping to emulate the success of Apple`s AppStore.

(hjjin@heraldm.com)

By Jin Hyun-joo