Saturday 20 October 2018

How Samsung fell behind Sony and LG in premium TV market

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Stock Image

Joyce Lee

At the 2013 annual Consumer Electronics Show in Las Vegas, flashy organic light-emitting diode (OLED) televisions sporting credit card-thin screens were at the front and centre of Samsung Electronics' new gadgets display.

Later that year, the South Korean company splurged on marketing the televisions - which then retailed at around $10,000 (€8,300) for the 55-inch model - to the ultra wealthy.

Among the promotions was a penthouse party for the residents of One Hyde Park in London, labelled the world's most expensive residential block.

But by 2015, it had stopped making OLED TVs, saying the market was not ready to embrace the high costs of the technology - based on thin films of carbon-based modules that light up in response to electric current.

Instead, it decided to focus on developing liquid crystal display screens that are backlit and enhanced with so-called quantum dots - semiconductor nanocrystals that produce colours and can improve picture quality.

These are known as QLED TVs.

It appears to have been a costly misstep. OLED TVs have become a dominant technology in the premium market - that is for a TV of at least 55 inches in screen size costing more than €2,000 - as the cost of producing them has dropped dramatically.

Samsung is now the only major TV manufacturer not to produce OLED screens.

And while the TV business generates less than 3pc of Samsung's profit, which largely comes from its semiconductor and mobile phones businesses, the loss of the leadership of the premium, higher-margin market is a hard blow.

Samsung declined to comment on whether ending OLED TV production was a costly mistake, or who made the fateful decision.

A look at online reviews of both OLED and QLED TVs in the past couple of years indicate that OLED TVs made by South Korea's LG Electronics and Japan's Sony gained fans because of the quality of the picture.

In particular, reviewers cited more realistic colours and high resolution, as well as attractive designs and increasingly reasonable prices. That doesn't mean the Samsung QLED TVs don't have their supporters. Picture quality has also improved and prices have dropped, but they don't tend to be reviewers' top picks.

"OLED TV's jump in premium TV market share is a direct result of its outstanding picture quality," said Ross Young, CEO of research provider Display Supply Chain Consultants. "Samsung may have mis-stepped in their 2017 product by emphasising design over picture performance," he added.

Samsung last year only got an 18.5pc share of global sales for premium TVs, based on dollar revenue, down from 54.7pc in 2015, according to research firm IHS Markit.

Meanwhile, competitors Sony and LG have leapfrogged Samsung to grab 36.9pc and 33pc of the market respectively. Still, Samsung remains the biggest maker of TVs in the world - a title it has now held for 12 years. It also claims to be number one in premium TVs, with more than a 40pc market share, based on data from GfK.

These figures include 55-inch TVs that are cheaper than the €2,000 IHS uses to define the segment.

Samsung Electronics' decision to base its TV business on LCD technology was made after it took the advice of Samsung Group's now-defunct Corporate Strategy Office, a source with knowledge of the matter said. (Reuters)

Irish Independent

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