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Monday, October 7, 2013

Is Samsung overly reliant on smartphones?

The headline in today's English Chosun Ilbo jumped out at me because I've posted on numerous occasions (for example, see my post on "Slim Smartphones, IT Exports and the Creative Economy") over the years about South Korea's heavy reliance on hardware manufacturing and exports, versus software and services.   As the Chosun Ilbo article points out, analysts believe that Samsung's mobile division, which includes smartphones, accounts for 65 percent of total quarterly operating profit. "In turn, Samsung Electronics accounts for 66 percent of the entire Samsung Group's revenues. That means that slow smartphone sales could rattle the entire group badly. Experts warn that Samsung must come up with new growth engines for a time when the global smartphone market is saturated. Otherwise it could go the way of former rivals Nokia and Blackberry."
In the larger scheme of things, it is well to remember that the rapid advances in digital networks these days are creating a global market in which content is king.  Those companies that manufacture the hardware and components for networks will have a role, but two thirds or more of the total market will be in content, software and information-based services.

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