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Samsung takes a bite out of Apple Add to ...

As the camera zooms in from a bustling San Francisco street scene, a young woman in thick brown frames and a blue cardigan waits in line, texting as she sings, “Nine hours down, and we’re almost in the door!”

The scene then shifts to Chicago, where more hip twentysomethings stand in line. A guy in a sweater and red beanie asks, “If it looks the same, how will people know I upgraded?”

The targets of derision in the ad are obvious: Apple Inc., its newest iteration of the iPhone, and the cross-section of its most loyal fans willing to camp out and wait hours to get their hands of the latest gadget from the Cupertino, Calif.-based technology giant.

The company behind it, though, is slightly less obvious, given its pervasive but understated presence in the global mobile market: Samsung Electronics Co. Ltd. The commercial eventually shifts, and those waiting in Apple’s lineups see people using slick Samsung phones and blurting out remarks like, “Whoa, what’s she got there?”

The sprawling South Korean company, which makes everything from fridges and washers and dryers to TVs and high-end smartphones and tablets, has struck a newly confident tone.

That Samsung hasn’t been ridiculed itself for the Apple-mocking advertisement is testament to how far the company has come. It is wrapping up a banner year, surpassing Apple to become the world’s largest smartphone manufacturer – shipping 27.8-million smartphones in the third quarter compared with Apple’s 23.8-million, according to research firm Strategy Analytics. (Apple had only recently overtaken Nokia Corp.)

“Apple doesn’t own innovation and design out there right now,” says Brian Wallace, a vice-president of strategic marketing at Samsung, who joined the company this year from Canadian smartphone giant Research In Motion Ltd. “It was time to stand up and say, ‘Here’s an alternative.’ ”

Samsung’s commercial went viral – it was viewed more than four million times on YouTube. More impressive is the way it has reshaped the wireless phone market, seizing on Google Inc.’s free Android operating system and trying to out-innovate Apple on the hardware front. Mike Walkley, an analyst with Canaccord Genuity who tracks hardware manufacturers, said Samsung’s recent growth is likely to continue. He raised his estimate for the company’s fourth quarter by about three million units, and now thinks Samsung will move 34.5-million smartphones in the quarter.

“Samsung’s smartphone share gains are impressive as the company continues to materially grow smartphone sales despite the launch of the iPhone 4S,” Mr. Walkley wrote in a recent note to clients. “We believe Samsung will extend its Android leadership position during [the fourth quarter] to over 40 per cent of total Android units sold.”

In October, Samsung Electronics announced a 37-per-cent increase in third-quarter revenue from its telecommunications division, driven by strong sales of Samsung Galaxy phones. The unit posted an operating profit of 2.52-trillion won (more than $2-billion Canadian).

Apple remains a force in the smartphone space, of course. Its newest iPhone, though similar to the one that preceded it, came with Siri, the “digital assistant” that responds to voice commands, and has sold extremely well. Apple has also had some success in emerging markets such as China and Brazil, where Samsung and other lower-cost handset makers like Nokia are much more established. The success of Apple and Samsung has hurt sales at other Android-using smartphone makers, such as Taiwan’s HTC Corp.

In some countries, “People are looking at these phones as their first computer,” says Paul Brannen, Samsung’s Canadian vice-president for mobile. Samsung’s smartphone revenue in Canada has grown 50 per cent, year-over-year, with unit shipments up 9 per cent, he notes.

Samsung’s growth in both the high- and low-end markets has also further squeezed Waterloo, Ont.-based smartphone giant RIM. In the U.S., RIM has lost ground to high-end devices running Android, but analysts are also noticing a proliferation of cheaper Android phones in emerging markets where RIM has long been dominant.

When asked if RIM could have taken direct aim at Apple with a television commercial like Samsung’s, Mr. Wallace laughs, then falls silent for a few seconds before he replies. “Do you really expect me to answer that?” the former RIM executive says. “You can imagine my answer to that. I think there was a time.”





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Sony, Samsung dissolve joint venture

Japan’s Sony Corp. and South Korean rival Samsung Electronics Co. Ltd. are dissolving their joint venture in liquid crystal display panels as Sony tries to stanch years of losses in its TV business.

Sony said Monday that Samsung will buy all of Sony's shares in the joint venture for about 1.08 trillion Korean won ($954-million) subject to a final agreement.

The joint venture called S-LCD was set up in 2004. Sony, which fell behind in flat panel TVs, invested in a Samsung panel factory to ensure a steady supply of panels for its LCD TVs.

Sony’s TV operation has lost money for seven straight years and the company is straining to return that key business to profit.

The prices of TVs as well as panels have been dropping so it makes more sense to buy panels at the market rate than to invest in production.

Sony, which makes Bravia TV sets, does not make its own LCD panels.

It said it will enter a new partnership with Samsung to buy panels, and will also continue buying panels from other manufacturers.

Sony said it will suffer a loss of ¥66-billion ($864-million) for the third quarter of this fiscal year, which ends later this month, because of the declining value of investment in S-LCD.

Getting out of the production venture will produce substantial savings after January, 2012, when the deal is completed, according to Sony.

It was still unclear how Sony's profit forecast for the fiscal year through March of 2012 will be affected, company spokesman Takashi Uehara said.

Associated Press

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