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MarketScreener Homepage  >  Equities  >  KOREA EXCHANGE  >  Samsung C&T Corp    000830   KR7000830000


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Samsung Makes Push Into High-End Tablet Market

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06/12/2014 | 08:15pm EST
By Min-Jeong Lee and Yun-Hee Kim 

Can Samsung Electronics Co. take the No. 1 spot in tablet computers away from Apple Inc. and conquer that market as it has dominated smartphones?

The Korean electronics giant is giving it a shot, with a strategy that piggybacks on the success of its high-end Galaxy S handsets.

Samsung on Thursday rolled out a pair of high-end, Android-based tablets that have a more sophisticated look and feel, with a brighter, thinner and lighter screen than previous models. It is branding the tablets as an extension of that premium Galaxy S line, by adding an "S" to the end of the Galaxy Tab name as well.

"What I really tried to achieve was to give it a premium feel," said Lee Soo-jung, a senior designer with the team overseeing the Galaxy Tab S, who says she worked to put shades of gold in the white-colored tablet.

The company is also pouring more marketing dollars into the push, throwing for the first time a launch event for the tablets at a theater in New York's Madison Square Garden, a 46-year-old arena in midtown Manhattan that is more commonly the site of concerts and home to local professional basketball and ice hockey teams. Last year, Samsung launched its flagship Galaxy S4 smartphone at Radio City Music Hall.

Samsung declined to disclose how much it is spending on the launch; the company spent billions of dollars to promote its high-end flagship mobile devices globally in the past year.

Mobile-industry experts warn it will take more than glitzy promotions and glittery devices for Samsung to replicate its success in smartphones, which are currently the company's top profit generator.

Samsung's global tablet market share is already growing at the expense of Apple's, climbing to 22.3% in the first quarter from 17.5% a year earlier, while Apple's share shrank to 32.5% from 40.2%, according to research firm IDC. But the growth of the tablet market overall is slowing significantly as penetration increases in developed markets like the U.S. IDC expects global tablet shipments to rise only 12% this year to 245.4 million units, versus a 52% increase the year before.

Tablet sales are also showing signs of being undercut by oversize smartphones known as phablets, a category that Samsung is pursuing assiduously as well.

Analysts say one challenge for Samsung will be competing with myriad Android-based tablets that have equally good hardware but are cheaper. The 10.1-inch version of Samsung's Galaxy Tab S will cost $499, while the 8.4-inch version will cost $399. Last month, Chinese startup Xiaomi launched a 7.9-inch tablet called the MiPad that packs 16-gigabytes of memory for about $240. Taiwanese computer maker Asustek Computer Inc. unveiled a phone-tablet combo last month in the U.S. for $199 with a two-year AT&T Inc. contract.

With the Galaxy Tab S, Samsung is trying to make design the differentiator. Last month, Samsung named a new head of mobile design, Lee Min-hyouk, who is almost 15 years younger than his predecessor and credited with the design of some Galaxy smartphones.

Samsung designers sweated the Galaxy Tab S details, discussing everything from whether the back should have tiny circular punctures like the Galaxy S5 to the ideal tilt for flipping through Web pages sitting down, say people familiar with the matter.

But critics say Samsung muddies its premium image with its exhaustive lineup of mobile devices that come in various sizes and colors as its tries to address different price ranges.

In an interview, Samsung co-Chief Executive J.K. Shin defended Samsung's "all-segments" for "all-markets" strategy, saying "it's in our DNA to make everything from premium products to cheap ones." He stressed that the vast number of products Samsung manufactures is having an increasing influence on the daily life of consumers in various markets.

Bringing a better software experience to tablets also remains a challenge for Samsung.

The company has packed its new tablets with features like call forwarding, which allows users to take calls from their tablets after syncing them with their smartphones, and a magazine service dubbed Papergarden, with which users can view high-resolution photos from popular fashion magazines.

Samsung executives say the Tab S line will be the company's flagship tablet model. The tablets will use Samsung's organic light emitting diode or OLED display and have an 8-megapixel rear camera.

Samsung will continue to use Android for its future tablets, Mr. Shin said, adding the company doesn't have immediate plans to bring its homegrown Tizen operating system to tablets.

Samsung said the Tab S will be available in some markets starting in July, including the U.S.

-Thomas Gryta contributed to this story.

Write to Min-Jeong Lee at min-jeong.lee@wsj.com and Yun-Hee Kim at yun-hee.kim@wsj.com

Stocks mentioned in the article
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APPLE INC. -0.29% 318.31 Delayed Quote.8.71%
ASUSTEK COMPUTER INC. End-of-day quote.
AT&T -0.34% 38.5 Delayed Quote.-1.48%
SQUARE, INC. 2.67% 71.14 Delayed Quote.13.71%
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