May 12, 2004 4:11 PM PDT

Samsung to open electronics showcase in New York

SEOUL, South Korea--As part of its ambition to overtake Sony in consumer electronics, Samsung plans to open its own electronics showcase in New York sometime around September.

The showcase, which will be located in the Time Warner building, will serve a similar function as Sony outlets in New York City and San Francisco, along with stores that Apple Computer has opened. Though Samsung is calling the space a "store," the company won't actually sell products there, rather it will use the outlet to highlight its design efforts and brand. The company has already opened a four-story electronics boutique in Moscow.

Products coming out later this year from Samsung include a 52-inch projection television, with the electronics of the unit housed in the TV's stand to reduce the screen's bulk.

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"Displays are kind of like electronic furniture. You have to adapt to the living room," said Sangyeon Lee, Samsung's principal designer.

Samsung will also release a gamer cell phone with a large screen and 1.2GB of memory, similar to the concept behind Nokia's N-Gage, according to sources.

Although Samsung was once known as a low-cost manufacturer, the Korean electronics company has managed to move toward the high end of the market for consumer electronics through an emphasis on design, according to Lee. The effort began in 1996, when Kun Hee Lee, chairman of the sprawling conglomerate, announced to employees that "an enterprise's most vital assets lie in its design and creative capacities."

Now, the company employs about 441 designers worldwide, more than double the number in 1996, and mandates that the chief executives of its electronics divisions and others meet regularly as part of a design committee, according to Lee.

"Different offices have different strengths," Lee said. "London has an emphasis on color and physical design. San Francisco has strength in interface. The Tokyo office has a specialty on finish and different materials."

Samsung also has educational programs at the Parsons School of Design in New York and at Kyoto University, as an effort to recruit.

The push apparently works. The company has become one of the fastest-growing brands in the world, according to brand analysis firm Interbrand. The company nudged out rival LG to become the largest flat panel manufacturer in the world, according to statistics from DisplaySearch. It also sells more TVs than Sony and Philips Electronics, according to its own estimates. Executives often cite Sony as its largest competitor.

In cell phones, Samsung moved up to No. 3 worldwide in 2003 in terms of units and to No. 2 in terms of revenue, according to Strategy Analytics. Last year in the United States, the company released a new phone about once every two weeks. Recently, it began to sell phones with video cameras.

Overall, revenue came to $36.4 billion in 2003, while net profit came to $5 billion. Both revenues and profit are growing rapidly this year. (Revenue for the Samsung conglomerate, which includes insurance companies and construction groups, is higher, but the electronics company is the largest.)

Lee estimated that the design premium, or extra amount the company can charge for its products because of the way they look, is about 15 percent. A few years ago, the company also managed to raise the price of a portable DVD player sold at Best Buy from $799 to $999 because of design, he said.

 

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