Samsung sees slower growth in U.S. volume this year: Single-digit growth forecast as near-saturated market sees ‘ferocious’ competition

SAMSUNG ELECTRONICS CO. LTD. appears to be upping the ante in the U.S. cellphone market, where it is No. 2 – some distance behind Motorola Inc. and trailed closely by LG Electronics Co.
While confident of its future here, Samsung sees the U.S. market’s rate of growth slowing due to saturation and competition and that makes it harder to grow share, a company executive said.
The news that T-Mobile USA was temporarily offering all Samsung handsets for free – and a few key price reductions in Samsung’s offerings at the other toptier carriers – was merely one sign that the Korean vendor was stepping up the pace of competition in the United States. A flurry of product launches and anticipated announcements at CTIA 2008 next week seem timed to catch the competition off-guard.
Internationally, analysts have noted, Samsung is doing quite well in Europe and Asia against all comers, befitting the vendor’s status as the global No. 2 vendor as well.
Still, one analyst said, though Samsung is credited with innovative products such as the new ACE at Sprint Nextel Corp., the Juke at Verizon Wireless and the BlackJack II at AT&T Mobility, part of its U.S. success is due to Motorola’s stagnant product lineup. And Samsung’s U.S. products do not reflect a market-leading user interface or colors, materials and finishes.
Bill Ogle, chief marketing officer for Samsung Telecommunications USA, the U.S. arm of the Korean conglomerate, said he credited the vendor’s breadth of portfolio, developing brand image and technical innovations for its success. Ogle, who’s been on the job for five months, came from a background that included stints at Procter & Gamble and Pizza Hut. Ogle himself is another sign that Samsung is stepping up its game.
“Hey, we’re No. 2 now in the U.S. and we’re still growing at a really rapid rate,” Ogle said. “We have one of the strongest portfolios out there. We can hit every consumer segment. Each of our carrier customers work with a slightly different psycho-graphic. Our portfolio breadth allows us to engineer unique exclusives for each carrier and their consumer base.”
Having said that, Samsung’s internal forecast for the U.S. market is “mid-single digit growth this year” – which could mean 4% to 6% unit volume growth for the market in 2008.
That may preclude the large market share gain the vendor made in 2006-2007, when it surged to 17.4% from 14.4% of the U.S. market, according to NPD Group. Many believe that Samsung’s surge came, in part, as Motorola Inc. wavered. Translation: the U.S. market is hard fought and Samsung is cautiously optimistic.
Ross Rubin, analyst at NPD Group, said that “Samsung rides the twin engines of AT&T Mobility and Verizon Wireless,” but declined to forecast any share movement for Samsung this early in the year.
“They are not leading the U.S. market in user interfaces or colors, materials and finishes,” said Avi Greengart, analyst at Current Analysis. “Razr fatigue is definitely helping them.”
“On the other hand,” Greengart said, “Samsung has touchscreen products in other parts of the world and I assume they’ll come to the U.S. I have not seen any such indications from Motorola.”
To what does he attribute Samsung’s U.S. ascendance?
After getting battered a bit by Motorola during the Razr years, Samsung has righted itself with an incredible wealth of handsets and strong carrier promotions, Greengart said. Samsung now has the most handsets (57) across the top-tier carriers – except Motorola, whose numbers (62 handsets) are bolstered by iDEN devices (19 models) at Sprint Nextel. And, unlike Nokia Corp. and Sony Ericsson Mobile Communications, Samsung has deliberately avoided antagonizing U.S. carriers by seeking alternative retail channels.
Still, the U.S. game is changing as the market competition tightens and Samsung understands that, Ogle said.
“The competition for consumers is going to get more ferocious,” Ogle said. “We sense that coming. A lot of people do. And it will cause everyone to reconsider how they go to market to capture a larger piece of that pie. We feel confident in our unique competitive advantages and innovative products.”