Sunday 25 September 2016

Selling the Samsung ecosystem

Samsung Ireland director Gary Twohig tells Sarah McCabe why the Korean company will beat Apple and Huawei in the smartphone wars

Published 06/03/2016 | 02:30

'I count my time here by launches, not years,' says Gary Twohig of Samsung, with the Gear VR headset and the S7 Edge. Photo: Mark Condren
'I count my time here by launches, not years,' says Gary Twohig of Samsung, with the Gear VR headset and the S7 Edge. Photo: Mark Condren

The light is fading over the mountains outside my ski chalet.

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Through the window to my left, I can just make out their snowy summits. I am sitting on a red couch, in front of a large screen, ready to switch on Netflix. Magazines are arrayed artfully on the coffee table in front of me. It all looks very comfortable.

Looks, but not feels, very comfortable. I take off my Samsung Gear VR headset and I am back in Stillorgan, in Samsung's pleasant but decidedly less picturesque Dublin headquarters.

The Gear VR headset is one of the company's key products for 2016. The headset plugs into newer Samsung smartphone models and lets users immerse themselves in a virtual world.

It is priced at €99, a bargain by virtual reality standards. It was made in partnership with Facebook-owned virtual reality pioneer Oculus Rift. Mark Zuckerberg helped to promote it at last month's Mobile World Congress in Barcelona. A photo from the event went viral, showing the social media tsar striding past unsuspecting journalists strapped into the headsets.

"The aim is to make virtual reality accessible to everyone, with a high-quality mobile device at an entry-level price point" says Gary Twohig, director of Samsung Ireland. "It's accessible, it's portable, it's priced reasonably."

South Korea-based Samsung has released a specialised 360-degree camera alongside the headset, so that users can make their own content as well as view others'.

"You could film a wedding, so that friends overseas can experience it as if they were there, for example," Twohig says.

"You could use it on a plane to watch movies, or for gaming. But it also has huge applications for business."

Tourism Ireland is using it to provide virtual walk-throughs of key Irish tourism sites at trade shows. Sherry FitzGerald is using it to give house buyers virtual tours of unfinished apartments.

"It was a smash hit at my house this Christmas," says UCD graduate Twohig, who spent the first half of his career working for Virgin Media. "People of every age, from my kids to my parents, were dying to use it."

Twohig heads up the Irish team for the suite of Samsung electronics sold in Ireland, spanning television, audio, connected devices, smartphones and more. Traditionally, Samsung sold electronics mainly to consumers but the company took a strategic decision about three years ago to push harder in the business-to-business market.

"People expect their electronics to work for both business and personal purposes today," says Twohig. "We are cornering in on the business to business market, across the spectrum. We are seeing the biggest growth in the large enterprise space."

Founded in 1939, Samsung is the world's largest electronics manufacturer but has only had an office in Ireland for nine years. It directly employs about 50 people here in sales, marketing, supply chain, finance and other roles.

Father-of-two Twohig has worked there for seven years; he joined from Samsung's UK office.

"I count my time here by launches, not years," he says. The company will launch its "most impressive, best ever smartphones" in Ireland, the S7 and the S7 Edge, on March 11. Based on pre-orders, he expects twice as much demand for the S7 as Samsung's last new phone.

Success in the smartphone category is crucial for many of Samsung's other products.

"Smartphones are key for electronic device makers because they decide what consumers buy in a host of other categories" says Twohig.

If you have an iPhone, you'll be more likely to buy an Apple TV than a Google Chromecast, for example, and more likely to buy connected devices that are compatible with Apple's operating system than with Android.

"The smartphone is the centre of the ecosystem" he says.

Samsung lost market share in Europe in the smartphone category in 2015 but fared better in the US. It is challenged at the high end by Apple's iPhone and at the mid-range and low end of the market by devices from Xiaomi, Lenovo and Huawei, which cost their manufacturers less to make.

Samsung's response has been to move away from cheaper devices, Twohig says.

"We made a strategic decision towards the end of last year to move out of entry-level devices, phones with a sub-€160 price point. We are actually seeing growth in our new premium models," says Twohig.

He does not accept my suggestion that Apple is the brand that comes to most peoples' mind when they hear the phrase "premium smartphone".

"I'd argue they also think Samsung.

"The quality of our smartphones is second to none. And we are leading one of the biggest innovations to come to smartphones with the Gear VR."

Challenger luxury brands will have a hard time, he adds. "It takes a long time to build up a big stake at the high end of the market. It takes a huge amount of brand building."

He will not give away the company's share of the smartphone market in Ireland, but says that Samsung and Apple regularly trade places for the top spot. Chief among the company's strategies in this fight is Samsung Pay.

This is an electronic payments service which will allow the owners of Samsung smartphones to pay for goods in stores, using traditional credit card terminals, with a swipe of their phone.

It launched in the US and Korea in the autumn of 2015. About five million registered users completed $500m in transactions within the first six months, Samsung said at the end of February. Twohig describes it as "transformative".

Apple Pay has not yet indicated a release date for its smartphone payment service in Ireland, so it looks like Samsung will get there first.

"We are rolling it out into Europe right now," says Twohig.

"It will hit the UK this summer and come to Ireland as soon as possible after that, most likely before the end of the year. We have to secure agreements with payment networks first.

"It will recognise loyalty cards, as well as act as a debit or credit card, meaning users can do away with those masses of plastic in their wallets."

"It's another way that the smartphone becomes central to your life. The days of paying for things with a load of different cards that you can just as easily lose are coming to an end.

"Ireland is definitely ready for it - just look at the success of the contactless card payment system in the past year."

Technology which allows people to control their home and car from their phone is the next battleground, Twohig adds. To that end, Samsung bought Smart Things, a US business pioneering home automation via smartphone, for a reported $200m (€180m) in 2014.

It has also entered the connected car race. The company recently unveiled Connect Auto, a device designed to "smarten" cars. It plugs into vehicles with diagnostic ports, which Twohig says means virtually all cars released in the last 10 years.

It connects the vehicle and its various functions to the internet, controllable by smartphone. Users could turn their car into a wifi hotspot, open and close the vehicle at the touch of a button, turn it on remotely or even beep the horn with their phone when they can't find it in a busy car park.

It has lots of applications for businesses too, Twohig says. Companies with fleets of vehicles will be able to track their cars on the road and in the event that they are stolen.

The device can even track driving performance, with potential applications for the insurance industry in better gauging risk and setting motor insurance premiums.

It may take a while to reach Ireland, he adds. A price and distribution method have not yet been finalised.

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