SAMSUNG STARTS PUTTING THE “B” BEFORE “C”
August 13, 2008 - Samsung Electronics recently hosted
a press tour in South Korea, where executives outlined the company’s decision
to move its printing strategy from a B2C to B2B model. “We can make products as
well as anybody, but what we really need to do is develop relationships with
businesses—not just consumers,” said Gregory Lee, executive vice president for
Samsung Electronics’ Global Marketing Operations. By concentrating on
increasing brand awareness, continued excellence in technology innovation, the
opportunities that its newly launched open architecture platform offer and
expanding its distribution network, the company is confident that it can reside
in the document imaging industry’s Top 5 in terms of overall revenue by 2012.
Samsung has had a rich history in semiconductor
manufacturing for almost four decades. Furthermore, it’s the market share
leader in flash memory and flat-panel and LCD televisions, while sitting in the
No. 2 position for mobile phones. Lee is optimistic that the company can
achieve the same level of success with printers. “Document imaging today is a
$135 billion industry and it’s projected to reach $166 billion in five years;
there’s plenty of room for us to grow,” he said. “The B2B aspect is attractive
to us because of the constant revenue stream flowing in from consumables and
software, which are the windows to becoming a total solution provider.” Rather
than simply selling hardware, placing an emphasis on these aftermarket items is
but a portion of Samsung’s desire to make an aggressive attempt at narrowing
the gap between it and, chiefly, HP.
The Benefits Of Branding
Regardless of whether it’s a color or monochrome
single-function printer or printer-centric MFP, Samsung sold the second highest
number of devices in each of the four categories last year, according to the
company. This is mainly due to Samsung’s standing as a major supplier to many
manufacturers in the industry, including Xerox, Lexmark and Dell. But with its
current initiative of driving sales to businesses, Samsung understands that
elevating familiarity for its own name is a crucial component of the game plan.
“The chairmen have had a vision of Samsung being more than just an OEM by
investing in our brand so that people recognize Samsung all over the globe,”
Lee said. “We already have a strong presence in Europe and Asia, but by using
holistic messaging I’m sure that we’ll reach the business market we’re
targeting in the Americas.”
Samsung is widely heralded as being the fastest
growing brand, with equity valued at $16.9 billion according to a joint study
compiled by BusinessWeek and The InterBrand Foundation; Samsung is now
ranked No. 21 in the world, steadily rising four spots since 2003. Much of that
substantial sum is derived from the company’s accomplishments with its other
products, but with the assistance of printers Samsung might ascend farther up
the list.
To achieve greater brand awareness, the company will
strengthen its messaging for its document imaging equipment. “During the
second half of 2008 and into next year, we’ll roll out separate campaigns aimed
at the business-to-business and business-to-consumer markets,” said Anthony S.
Buzzetta, senior manager of integrated marketing communications for Samsung
Electronics America’s (SEA) Information Technology Division (ITD). “From August
to November, Samsung Printing Solutions will kick off with advertising that
focuses on two strategically important vertical segments—education and
healthcare—in industry publications, and complements SEA ITD’s participation in
vertical industry trade shows like GTC (Government Technology Conference) and
NECC (National Education Computing Conference). For the B2C side, SEA ITD
will continue to promote products to traditional retailers, as well as the
e-tail channel, through online advertising, redesigned packaging and
point-of-purchase displays.”
Product Portfolio
Samsung released its initial laser printer in the late
90s, but it believes that it wasn’t until 2004 that its devices had an
identity. “Our revolutionary ‘slim shelf design’ was ideal for the B2C market,
and we’ve actually reduced the footprint by 28 percent over time,” said Taesung
(TS) Lee, vice president of brand (North and Latin America) and OEM group for
Samsung Electronics’ Digital Printing Division (DPD).
Though the company has won some prestigious awards for
design, it acknowledges that a different tack has to be taken in order to place
more of its products into businesses. Hee-Yul Kim, industrial designer for
Samsung Electronics’ DPD, explained that the company has learned that consumers
want a device that doesn’t take up a lot of room and fits into their interior
decorating motif. To enable its products to blend in even more to the
surroundings, Samsung has shifted to a glossy piano black finish—the ML-1630
and SCX-4500
being the prime examples—in the last year. “Products are supposed to adapt to
the environment, not the other way around,” Kim stated, adding that with larger
offices it’s more the look and feel of the control panel that’s vital. “We have
a competitive advantage with our aesthetics, but we’ll continue to focus on the
usability and functionality, and incorporate these aspects into our business
devices.”
The move toward a B2B strategy is underscored by the
company’s diversifying its offerings and slowly speeding up engines. While
color printers had been on Samsung’s menu since the space-saving design was
introduced, the company dove into the MFP pool in 2006 with the second
generation of its newer products. Now in the third incarnation, Samsung’s three
recently launched devices reside in segments that the company has never been in
before: the 55-ppm SCX-6555N,
the 45-ppm SCX-6345N
and the CLX-8380ND,
which has a rated speed of 40 ppm for color and monochrome. (Note: First
Look Reports on the SCX-6555N and SCX-6345N are available on bliQ.) “Had we
been simply focusing on single-function printers this whole time, it would be
very difficult to attain the goals we’ve set for ourselves by 2012,” Lee said.
With the faster speeds and higher paper capacities,
these devices, known collectively as the MultiXpress series, represent the core
of what the company will use to brand itself in the B2B space. Additionally,
because Samsung owns all of the technologies in its printers, it’s more
flexible than other manufacturers and should have no problem supplementing its
portfolio for businesses, departments and workgroups in the years that follow.
“We’ve introduced some key differentiators along the way,” TS Lee said. “We
were the first to employ a memory slot and include legal-size scanning on A4
machines. These improvements and those that follow are helping Samsung gain
momentum in the U.S. laser printer market.”
Being “Open” To Software
Samsung knew that before fully launching into the B2B
strategy, it would have to not only offer excellent hardware but software too.
That’s why, when the company released the SCX-6345N, it included JScribe Open
Architecture, a platform that allows third-party developers to integrate their
software with Samsung devices. According to Tony Venice, senior product manager
at Samsung, in order to enable Samsung’s customers to scan their documents into
Microsoft’s SharePoint for document management and EMC’s Documentum, Samsung
teamed up with a company in Germany that developed the JScribe platform. Venice noted that while JScribe will be Samsung’s open architecture platform for the short
term, the company intends to develop its own platform, which will be supported
along with JScribe.
Though the executives gave few details about the upcoming
open platform, “we’re looking hard at developing solutions and will double or
triple our investment in R&D to make this happen,” Gregory Lee said. TS Lee
built on these comments. “We’re reliable with hardware and options, but we’re
behind with software,” he said. “We’re taking a flexible approach to open
architecture, and it’s just a matter of maturing and making horizontal
solutions vertical.” He added that Samsung sees both its open platform and
future solutions being suitable for dozens of vertical markets.
“We’ll lead with hardware, but we know that 10 to 30
percent of the market is derived from solutions so there’s more room to grow,”
said SungHwan Yo, vice president of product planning for Samsung Electronics’
DPD. “Plus, resellers have been asking us more and more what else we can do,
aside from just offering hardware.
“Our two main focuses around building our own open
architecture are to be able to customize devices and to allow for quick
integration,” Yo continued. “We’re looking at Java and JavaScript,
but the Web services application makes a lot of sense because it’s easy to
implement and the control panel can be turned into a Web page. Currently
we are using Java Script or JScribe as the platform. In the future,
we will looking at other options like Web services which will give users more
flexibility in terms of what they can do with the printing device.” According
to Yo, by the end of 2008 Samsung will have as many as eight products with
the open platform, and it’ll do a firmware upgrade on existing devices to
support it.
One of the more advanced capabilities Samsung wants to
add is remote device monitoring, which provides for proactive service
diagnostics and automated meter readings so that, in the future, the company
will be able to offer managed print services (MPS). Samsung currently has
CountThru—a pay-per-click MPS program—running in a network of banks throughout South Korea and will localize it for implementation in the United States in the near future.
Moving Merchandise
Like most manufacturers in the industry, Samsung wants
to expand distribution so that it can achieve greater and more rapid sales
growth. Jay Shears, director of marketing for SEA’s ITD, explained the
company’s distribution chain. “Our smaller indirect dealers buy through BTA
distributors, while high-end printer MFPs go through the BTA channel and
exclusive MFP-certified resellers,” he said. “There’s an easy qualification
system for these vendors, provided they already sell competitive printers.”
Samsung currently has programs for strategic resellers
and VARs. According to Shears, the company is starting this initiative with a
select group of resellers. “The MFP-certified program will ensure initial
Samsung rollout to include setup, solutions and services so that we can provide
the right kind of customer service,” he said. “Our BTA business is focused on
A4 and they’re learning how to sell these devices and developing the right kind
of expertise to talk to IT managers, from product attributes to service and maintenance.”
Samsung has 1,600 authorized dealers that it works with, all of which can carry
the full portfolio if they choose to.
Because the company doesn’t have a direct sales force,
“in order for us to be successful, our partners must be successful,” Yo said.
“We may re-evaluate the possibility of buying a direct operation.
“There’s a compelling story around A4,” Yo continued.
“For us, the BTA channel took to the SCX-6345N right away, it’s been great, and
it got us thinking about what else we could do. The success of A4 printer MFPs
to this point has been against A4 single-function printers, but things are
going to evolve; there’s going to be better finishing, document handling and
improvements to workflow. The B2B strategy is going to take time, but if we can
make some headway and nibble at the low-lying fruit, then we’ll be able to move
farther up the tree.”
“It’s going to take some time to build out our sales
channel, but our supply chain is as competitive as anybody’s,” Gregory Lee
said. “We’ll start by focusing on medium-size businesses before moving on to
bigger ones, but regardless of market there are basic needs and total cost of
ownership (TCO) is one of them—and we’re good at it. We want to marry our TCO
proposition with other attributes to make our B2B strategy as complete as can
be. Overall, we’re aiming to have 80 percent of revenue stem from B2B business
and the remainder from the B2C market.” That would be a 20 percent increase and
decrease, respectively, from what Samsung aims to achieve in short order.
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