Eroding margins could force Samsung out of sector by 2011 - UPDATE: Samsung responds to news.
Though we’ve seen plenty of decent Samsung notebooks over the years, it’s perhaps easy to forget that compared to its consumer electronics business, Samsung’s computing division is relatively small. Speaking to a select group of UK journalists, Senior Manager of Overseas Sales & Marketing, Sukyong Hong, set out Samsung’s targets for its notebook business, admitting that if the company were to fail to meet these targets, it would be impossible for the company to “survive” in the market.
Currently the company possesses a relatively low 1.7 per cent of the worldwide notebook market, trailing the likes of Sony, Lenovo, Dell, Acer and Toshiba sitting between it and HP at the top. Taking into account falling margins and greater competition, Samsung feels it needs to reach 5.7 per cent market share by 2011, selling 11 million units in the process, to make its notebook business sustainable.
This, on current evidence, would be quite a challenge given that the company has only increased its market share by 0.5 per cent since 2005. But, as Samsung was keen to point out, unlike in the UK where its presence is disproportionately strong, Samsung has yet to seriously penetrate the huge US market, or many of the emerging markets it expects to become important. Consequently, there’s a good chance that when combined with the continuing growth of the notebook market as a whole, Samsung will be able to meet these seemingly demanding targets and it’ll be pinning its hopes on the likes of the soon to be released R410 (pictured above) to achieve them.
Samsung has issued the following statement regarding this story and the news reported elsewhere:
“Following a story published yesterday regarding the long term strategy of the Samsung Electronics Notebook PC Division, Samsung would like to clarify its position. Samsung has no intention of closing its Notebook division in 2011. We do however expect the market to become increasingly saturated and therefore for there to be increased price competitiveness.
In light of this Samsung Electronics has set an ambitious but realistic goal of achieving 5.7% market share by 2011 to sustain profitability. This level of market share should not be linked to survival within the marketplace but to ensuring sustainability for long term business growth. This has been demonstrated in Samsung Electronics’ continued expansion into new markets, most recently entering Italy in August 2007 and Poland in March 2008. Samsung has an aggressive growth strategy for 2008.”