Case 6-6

Samsung Electronics Co.

The office park in northern New Jersey hardly looks like a place that plays a role in cutting-edge design.
Hard by a highway interchange, the two-story building is about as distinctive as white rice. But climb the
stairs to the second floor, and you'll see designers from Samsung Electronics Co. studying in painstaking
detail the American consumer psyche. There, engineer Lee Byung Moo watches from behind a two-way
mirror as three women and two men stuff a stainless steel refrigerator with the contents of a half-dozen
bags of groceries. After the five have finished and given their opinions on several potential configurations
of drawers and compartments, Lee and two others rush into the room to take photographs and note exactly
where the "shoppers" have put the ice cream, chicken, beer, milk, and other food. "We want to know the
tastes of American customers because we need to develop products that fit their lifestyle," says Lee.
Half a world away, Choi Won Min sits in a windowless room on the ground floor of a Seoul skyscraper -- an
equally unlikely spot to find the leading edge of design. He spends his days (and often his nights) in front of
two piano keyboards, a phalanx of mixing consoles, and dozens of synthesizers. With his headphones on,
he hits a note, listens intently, then tweaks a few settings and hits another key. His primary mission in the
two-year-old lab: coming up with a suite of bells, boings, beeps, and buzzes for digital gadgets that will
immediately say "Samsung" to users worldwide. In the past, "simple sounds seemed to be sufficient, but
now we realize how important sounds are in user interfaces," Choi says.
Lee and Choi are foot soldiers in Samsung's continuing assault on the world of cool. In recent years, the
South Korean company has begun gearing all it does, from financing to decision-making to training and
labs, to make Samsung a finely tuned receptor of all the things that make its products must-haves in an
increasingly competitive marketplace. Hundreds of millions of dollars have been spent spiffing up the look,
feel, and function of everything from refrigerators and washing machines to cell phones and MP3 players.
And the focus has been on research of the sort Lee and Choi are doing: finding out what's likely to sell
before consumers even know they want it. The effort has paid off: Samsung has grown from a me-too
producer of electronics and appliances into one of the world's leading brands -- in large part because of its
focus on design. "We want to be the Mercedes (DCX) of home electronics," says Yun Jong Yong, Samsung's
chief executive.
The way Samsung's moving, you'd think it wants to be the Ferrari. This year, Samsung won five awards in
the Industrial Design Excellence Awards (IDEA) -- making it the first Asian company to win more awards
than any European or American rival. (The competition is sponsored by BusinessWeek, which publishes the
results, but the laureates are selected by the Industrial Designers Society.) And since 2000, Samsung has
earned a total of 100 citations at top design contests in the U.S., Europe, and Asia. Brokerage Hyundai
Securities expects Samsung to earn $10.3 billion on sales of $52.8 billion this year, up from profits of $5.2
billion and $39.8 billion in revenues last year. (Although much of that increase comes from the
semiconductor division, the company's snazzy consumer products also helped.) "Samsung is the poster
child for using design to increase brand value and market share," says Patrick Whitney, director of the
Institute of Design at the Illinois Institute of Technology.
The change started in 1993, when Chairman Lee Kun Hee visited retailers in Los Angeles and saw that
Samsung products were lost in the crowd, while those from Sony Corp. (SNE) and a few others stood out.
So he ordered his managers to concentrate less on cost saving and more on coming up with unique
products. The bottom line: Great design could catapult Samsung to the top ranks of global brands.
DECADE OF DETERMINATION
The boss spoke. Samsung listened. And the company's design push was under way. To attract better,
younger designers, Samsung in 1994 moved its design center to Seoul from sleepy Suwon, a small city an
hour south of the capital. That same year, Samsung hired U.S. design firm IDEO to help develop a computer
monitor -- the first of many such collaborations with IDEO and other leading consultancies. Then in 1995,
the company set up the Innovative Design Lab of Samsung (IDS), an in-house school where promising
designers could study under experts from the Art Center College of Design in Pasadena, Calif., one of the
top U.S. design schools. Samsung designers were dispatched to Egypt and India, Paris and Frankfurt, New
York and Washington to tour museums, visit icons of modern architecture, and explore ruins.
Just as important, Samsung's designers have broken through the barriers of Korea's traditional Confucian
hierarchies. Although Korea has loosened up as democracy has taken hold in the last 15 years, respect for
elders and a reluctance to speak out of turn are still the norm. And Samsung as a whole still holds lots of
meetings where Confucian order prevails. But the design center is different. Located several minutes' walk
from company headquarters, it's a place with no dress code, where some younger staffers dye their hair
green or pink, and where everyone is encouraged to speak up and challenge their superiors. Designers work
in three- to five-person teams, with members from various specialty areas and levels of seniority -- all
working as equals.
The wrenching departure from tradition has paid off. Virtually all of the 19 IDEA awards Samsung has won
since 2000 are the fruit of such teams. Helped by its innovative designs and egalitarian approach, Samsung
has emerged as the best-selling brand in high-end TVs in the U.S., and the world's largest LCD computer
monitor producer, with 17% of the global market. And Samsung has sold more than 10 million SGH-E700s
-- the first clamshell phone with a hidden antenna -- racking up some $1.2 billion in profits since its debut
14 months ago. "Good design is the most important way to differentiate ourselves from our competitors,"
says CEO Yun.
Many of the new design ideas are coming from outside. Last year, Samsung started sending designers
abroad to spend a few months at fashion houses, cosmetics specialists, or design consultancies to stay
current with what's happening in other industries. Lee Yun Jung, a senior designer who works on colors and
finishes, spent last autumn in residence at a furniture designer in Italy. While she gathered plenty of ideas
for product surfaces, the real eye-opener was the relaxed culture of the place. "A 23-year-old novice could
interrupt the 60-year-old master," she marvels. Since returning, Lee has tried to be more open to ideas
percolating up from the bottom of her department.
Today, Samsung knows it can't afford to let up. It's the first Asian company outside of Japan to use design
to vault to the first tier of global companies. But in the Digital Age it's not too hard for strivers such as
Lenovo of China and BenQ to make products that approach the quality of long-standing industry giants
such as Sony, Panasonic, or Philips Electronics (PHG). Samsung, of course, was an upstart itself not long
ago. It was the transition from analog to digital that gave the Korean company the opening it needed. "In
the analog age, Samsung devoted most of its energy trying to catch up with Japanese leaders, but the arrival
of digital put everybody on the same starting line," says Chin Dae Je, Korea's Information & Communication
Minister and president of Samsung Electronics before joining the Cabinet last year.
These rivals -- whether newcomer or veteran -- aren't standing still. The newbies often hire U.S., Japanese,
or Italian design consultancies to help them shape products that won't get lost in the crush of goods at Best
Buy (BBY) or Circuit City Stores (CC). And those Asian upstarts are all looking to Samsung as a role model
for their own transformation into global brands. The likes of Sony and Matsushita (MC), meanwhile, are
also placing a renewed emphasis on creating stand-out products. "Sony has been losing some of its edge in
design," says Makoto Kogure, head of the Japanese giant's TV division. "Now we're drastically changing and
[creating a] Sony identity."
FRONT-LOADED DESIGN
So Samsung must continue to reinvent itself. In the past four years, the company has doubled its design
staff, to 470, adding 120 of those just in the past 12 months. And since 2000, its design budget has been
increasing 20% to 30% annually. To keep an eye on trends in its most important markets, Samsung now has
design centers in London, Los Angeles, San Francisco, and Tokyo, and this year it opened one in Shanghai.
More important, Samsung is changing the processes and procedures in its design department and giving
designers greater power to influence not just how products look but also what gets built. "Just as a lizard
cuts off its own tail to move on, we will have to break with the past to move forward," says Chung Kook
Hyun, the senior vice-president who runs design operations.
Samsung's designers these days no longer have to find a way to put their boxes around the devices that
engineers cook up. Instead, they often give concepts to engineers, who must then build the machine inside
the box dreamed up by the designers. James Choe, for instance, recently studied research showing that
consumers prefer printers in which the paper lies flat rather than feeding in vertically. Engineers working
on the same project, however, preferred a vertical model because it would cut the production cost of a
$110 printer by about 10%. Before Choe started at Samsung three years ago, the engineers might have
won. But when the desktop laser printer rolled out last year, Choe's design had prevailed. "The engineers
didn't like it, but in the end management listened to us," he says.
Sometimes the designers come up with entirely new product categories. Kang Yun Je thought Samsung
could do better than its rivals with a sleek, silver, rear-projection TV sporting a curved back and superthin
edges, so that when viewed from an angle it looks as thin as an LCD TV. "When we first came up with the
design, we had no guarantee it could be made," says Kang, a shaggy 36-year-old who sports a goatee and
wears his shirt untucked. "So I went to the head of engineering, and he said that if I could give him some
time and resources, he'd try to do it."
Where to get the resources? To make sure designers get heard, Samsung has created the post of chief
design officer -- something few other companies have bothered to do. And to make sure top execs stay
attuned to the importance of the issue, CEO Yun holds quarterly design meetings where the chiefs of all
the business units review new products and evaluate their designs. So Kang was able to simply call Choi
Gee Sung, head of Samsung's TV, computer, and audio businesses and chief design officer since January,
to secure backing for the TV project. A few years ago, Kang says, a designer at his level would have had to
go through the marketing department and midlevel execs before reaching top management. Choi liked
what he saw and gave Kang the go-ahead on the TV. Smart move: The TV, code-named L7, won a silver
prize in the IDEA competition this year and is expected to be a big seller.
Samsung's design focus goes well beyond just the look and feel of its products. The company is working to
improve the way people use and control gadgets, and two years ago it opened what it calls a "usability
laboratory" in downtown Seoul. There, across the hall from where Choi Won Min taps away at his
synthesizers in search of the perfect sound, engineers and consumers alike test everything from getting
products out of the box to the icons and menus on screens. "In the past, physical design was the focal
point," says Chief Design Officer Choi (no relation to the sound designer). "In the future, the user interface
will be emphasized more."
The usability lab was built to provide a lifelike forum for tests. It looks like a typical living room, with a
kitchen in the corner for testing cooking appliances. Entering the room, designers and engineers kick off
their shoes just as they do in a Korean home. On a recent fall day, one engineer padded around in her
slippers making rice in a Samsung steamer, another checked out a washing machine, and a third played
with the controls on a computer monitor. Behind a two-way mirror, an engineer controlled four high-
definition cameras that can zoom in on any corner of the room to record the sessions and save them for
later study.
It's that commitment to research that has given Samsung its edge. Many designers sit in on focus groups
and watch closely as potential customers provide feedback on their new models. And each foreign lab has
a researcher on site -- unusual in the industry. Hwang Chang Hwan, Samsung's principal mobile-phone
designer, faced complaints about the SPH-S2300, a three-megapixel camera phone. Techies and camera
aficionados liked the optical zoom lens -- a first in a camera phone -- but other consumers didn't like the
thickness of the lens. Most of all, young users hated the clumsy keypad, which was laid out in two rows of
six keys along the bottom of the screen in order to keep the phone short enough to fit in a pocket. So when
it came time to upgrade the phone, Samsung's designers listened. The new, five-megapixel successor sports
a smaller lens that allows for a slimmer body, and it slides open, exposing a larger screen but leaving room
for the traditional layout of three keys by four.
Can Samsung stay on top of its design game? Some skeptics say the company still doesn't have the breadth
and depth in design of Sony, or the ingrained design culture of Apple Computer Corp (AAPL). "Samsung has
improved, but I don't see an identity in their design that really speaks to consumers," says Jim Wicks,
Motorola Inc.'s (MOT) vice-president in charge of designing cell phones. Still, few would deny that Samsung
has managed to inject the importance of design into its corporate DNA. In this era of cutthroat competition,
that may be just what it takes to create a lasting advantage.
Case 6-6 Epilogue
The next big bet
The worlds biggest information-technology firm is diving into green technology and the health
business. It should take care; its rivals should take notice.
IN 2000 Samsung started making batteries for digital gadgets. Ten years later it sold more of them than any
other company in the world. In 2001 it threw resources into flat-panel televisions. Within four years it was
the market leader. In 2002 the firm bet heavily on flash memory. The technology it delivered made the
iPhone and iPad a reality, and made Samsung Apple's biggest supplierand now its biggest hardware
competitor.
The handsome payoffs from these ballsy bets made the South Korean company a colossus; last year its
sales passed $135 billion. Now it is embarking on a similarly audacious plan to move away from electronics
into technologies where it barely has a presence today. It intends to spend $20 billion over ten years on
solar panels, light-emitting diodes (LEDs) used for lighting, electric-vehicle batteries, medical devices and
biotech drugs. These businesses shift Samsung away from easily substitutable gadgets towards more
essential industrial goods (see table)or from infotainment to lifecare, as the company puts it. Just as
electronics defined swathes of the 20th century, the company believes green technology and health care
will be central to the 21st.
With these plans Samsung sees itself bringing technologies that are vital for society into much broader use.
The company has always had an eye for more than just the bottom line, seeking both to epitomise and to
further the progress of its home country. Now it talks idealistically of improving the world by driving down
the costs of zero-carbon power and providing poor countries and rural areas with medical equipment and
drugs that they cannot afford today.
But the plans are also an ambitious industrial power play, one that challenges some of the world's biggest
companies. Success would raise Samsung to new heights. Failure could lead to the firm losing what it
already has, no longer able to flourish just as a maker of commodity gadgets and components.
The 83 firms that are tied together in Samsung's remarkably complex structure provide 13% of South
Korea's gross exports. Samsung Electronics, the biggest of them, started making transistor radios in 1969,
and has since evolved into the world's leading manufacturer of televisions and much else. It is on track to
unseat Nokia as the biggest maker of mobile phones by volume next year. Interbrand, a consultancy which
seeks to calculate brand value, puts it in the world's top 20, ahead of Sony and Nike. It has come second
only to IBM in the number of patents earned in America for five years running.
Yet Samsung wants to diversify away from consumer electronics, a market that suffers from falling prices,
thin margins, fast product cycles and fickle customers. Chinese rivals may do to Samsung what Samsung
did to Western and Japanese firms in the past. The majority of our products today will be gone in ten
years, Samsung's patriarch and chairman, Lee Kun-hee, told executives in deliberately alarmist tones last
January.
To survive, he said, the company must not only go into the new businesses it has identified, but open itself
up to work with partners and even make acquisitions. Samsung has long been a closed world from that
point of view, a disposition reinforced after the disastrous acquisition of a PC maker in the 1990s. But now
the company knows it needs new skills, sales channels and customers.
Doing it the Samsung way
By 2020 Samsung's Mr Lee wants the five new business areas to provide $50 billion of revenue, and
Samsung Electronics to be a $400 billion company (for all his provocations to his staff, there are still going
to be a lot of flat screens and memory sold). It is a brash goal, admits Inkuk Hahn of Samsung's strategy
team. But ten years ago people were incredulous when Mr Lee insisted that Samsung, which then had sales
of $23 billion, could be the number-one technology company, with sales of $100 billion. It claimed that
crown just eight years later. This is why you have to believe us, Mr Hahn insists.
The new businesses look remarkably disparate, but they share a need for big capital investments and the
capacity to scale manufacture up very quickly, talents the company has exploited methodically in the past.
Samsung's successes come from spotting areas that are small but growing fast. Ideally the area should also
be capital-intensive, making it harder for rivals to keep up. Samsung tiptoes into the technology to get
familiar with it, then waits for its moment. It was when liquid-crystal displays grew to 40 inches in 2001 that
Samsung took the dive and turned them into televisions. In flash memory, Samsung piled in when new
technology made it possible to put a whole gigabyte on a chip.
When it pounces, the company floods the sector with cash. Moving into very high volume production as
fast as possible not only gives it a price advantage over established firms, but also makes it a key customer
for equipment makers. Those relationships help it stay on the leading edge from then on.
The strategy is shrewd. By buying technology rather than building it, Samsung assumes execution risk not
innovation risk. It wins as a fast follower, slipstreaming in the wake of pioneers at a much larger scale of
production. The heavy investment has in the past played to its ability to tap cheap financing from a banking
sector that is friendly to big companies, thanks to implicit government guarantees much complained about
by rivals elsewhere.
From crisis to crisis
Competitors also balk at the way that Samsung scales up quickly to supply parts to other firms as well as to
price its own gadgets keenly. Supplying the rest of industry drives down Samsung's costs yet further, with
its rivals in effect financing its success. This strategy can create problems. Samsung is Apple's most
important supplier in the smartphone and tablet-computer markets. Samsung components, which include
all the product's application processors, account for 16% of the value of an iPhone. It is also Apple's greatest
competitor in those markets. Apple is now suing the socks off the company for copying the look and feel of
its products. At the same time it is urgently seeking new ways to diversify its supply chain.
Many companies saw the potential of technologies
such as liquid-crystal panels, flash memory and
rechargeable batteries. But few could or would invest
billions in a single shot. That Samsung could is in large
part due to a cult of personality around Mr Lee, who
likes to keep things shaken up. Change everything but
your wife and children, he exhorted managers in 1993.
Three years later he lit a bonfire of 150,000 gadgets
because some were defective. Other bosses often need
to face a crisisa burning platform, in the
memorable phrase of Stephen Elop, Nokia's boss
before they make changes. Samsung does so when
things are going well. The company has pushed out
older managers and restructured its divisions over the
past two years despite posting record profits even in
the global financial crisis.
Management by perpetual crisis is perhaps a reflection of the company's national roots. In 1960, when the
Samsung companies were taking off, South Korea, battered by recent war, had a GDP the same size as
Sudan's; its last dictatorship fell only two years before the Berlin Wall. Today, though it enjoys one of the
world's highest living standards, South Korea is still an emerging market in some ways, with endemic
corruption and some economic structures that border on the feudal.
Find out how much of an Apple iPhone is actually a Samsung with our "teardown" infographic
Samsung, like its host country, has a foot in both the industrialised and developing worlds, which it has
used to its advantage. While it has always produced things for major IT firms and Western consumers, it
has aimed products at poor countries, too. This not only gave Samsung scale, but also market shares in the
world's fastest-growing economies. Whereas Western firms reeled in the recent recession, Samsung
flourished, buoyed by sales in markets that never stopped growing.
From laptop to rooftop
Some of the five new businesses Samsung has set its sights on are not that far from what the company does
already. Its experience in semiconductors and flat-screen televisions fits easily with solar cells and LED
lighting: the technology, materials and production processes are similar. Likewise, its expertise in batteries
for gadgets smooths the way for making car-sized ones. The firm wants to apply the magic of ever cheaper
chips to medical devices as it did mobile phones. Even drugs aren't so far afield when one sees them in
business-process terms: high-volume manufacturing with low defect rates. In all these fields Samsung
believes it can sitrather as Korea does geographicallyin between China, with its cheap products, and
Japan, with its costly, high-quality ones.
In solar energy Samsung plans to make panels for both domestic and industrial use. Producing panels for
utility-scale projects may allow it to lower prices for the residential market. Changsik Choi, who heads
the business, also speaks optimistically of a brand halo effect: consumers whose living rooms are stuffed
with Samsung products may choose the company for their rooftops too.
Samsung's dominance of the television market has already made it the world's second-largest maker of LED
components (Japan's Nichia is the first). Since they consume a fraction of the power of conventional light
bulbs, last longer and avoid some of the drawbacks of compact fluorescents, the first-generation
alternative, LEDs are expected eventually to become the norm for all sorts of lighting; the market is growing
by 65% a year. Samsung already sells LED lighting in South Korea and plans soon to expand abroad. In this
market it will hew to its strategy of supplying parts to others, thereby lowering costs for its own products.
In electric-vehicle batteries Samsung has joined forces with
Bosch, the world's biggest supplier of car parts and a fount of
expertise on power- and engine-management. Samsung sees
their partnership, SB LiMotive, as crucial since the car
business relies on close ties between carmakers and their
suppliers. Some carmakers, like Nissan and Toyota, will
continue developing their own batteries, but Samsung thinks
that many carmakers will not want to be in the battery
business, just as they are not in the petrol business, and that
they will be a rich source of demand. Chrysler and BMW are
among SB LiMotive's first customers.
For medical devices Samsung aims to use information
technology to lower costs, add features and make devices
accessible to more people, particularly the poor. For
example, it is developing X-ray machines that expose patients
to less radiation and do away with physical film. Last year
Samsung began selling a machine for testing patients' blood
chemistry that is smaller, cheaper, uses less power and offers more functions than rivals' devices. In April
it bought Medison, a South Korean maker of ultrasound equipment, as a way to get further into the market:
it is looking at buying body-scanner firms too.
In biotech drugs the company plans to begin as a contract manufacturer of biosimilars (generic versions of
biotech drugs) and has partnered with Quintiles, a drug outsourcer. The strategy lets Samsung gain
experience while assuming little commercial risk. It is building a factory outside Seoul and has already begun
developing biosimilars for medicines with patents that expire in 2016.
Incumbents and incomers
The markets are certainly promising, but they entail huge risks. Nor is the size of Samsung's commitment
quite on a par with the overwhelming force it has deployed in the past. The solar and LED businesses already
struggle with oversupply, meaning Samsung may get walloped by the same dramatic price erosion as it has
seen in liquid-crystal flat panels. Electric-vehicle batteries may be in similar straits if demand for the cars
they might power remains sluggish. They are also in the crosshairs of Chinese companies, as are medical
devices and drugs. In a bid to escape the vagaries of consumer electronics, Samsung may be ploughing
headlong into the areas most ripe for invasion by a new breed of emerging-market titans.
Acquisitions, a way of life in the drug business, are also a challenge: knowing what to buy and when is a skill
that Samsung has never developed. The same applies to dealing with government regulators: Samsung's
towering importance at home may give it a false confidence in its ability to handle governments elsewhere.
Its position as a domestic titan could be a hindrance in other ways. Working with partners entails sharing
information and a view of joint success that is at odds with its insular corporate culture. The international
talent the company will need to attract is also less likely to be moved by the admonishments and appeals
to national grandeur that Mr Lee has used to build Samsung's success. They might, indeed, find such things
wearisome.
Samsung's rivals are ready for a fight. Philips and GE have been preparing to compete with firms in emerging
markets for years, devising cheap products and building on existing relationships with clients. Toshiba plans
to spend an extra $9 billion in the energy and environment sectors over the next three years on top of its
normal capital expenditure, research and acquisitions. Fumio Ohtsubo, Panasonic's boss, praises his
Samsung rivals for their low prices but believes his company develops superior technology. If we can get
the same conditions in terms of free-trade agreements, low corporate taxes and other incentives, then we
should be able to compete, he says.
In medical devices Samsung will be up against firms like Philips, Siemens, Toshiba, Hitachi and GE (for which
Samsung made medical equipment between 1984 and 2004). GE's Indian office famously reduced the cost
of an electrocardiogram machine from $2,000 to $400. And the fact that hospitals prefer to buy different
equipment from a single vendor so that, in principle, everything works together puts a maker of this-and-
that at a disadvantage, even if it is cheap.
Perhaps the biggest challenge, though, will be one of succession. The 69-year-old chairman's son, Jay Y.
Lee, 43, was named president last December. Educated in Japan (like his father and grandfather, the firm's
founder) and at Harvard Business School, he has been groomed from the start. His first test will be
reforming the jumble of opaque, interlocking relationships and conflicts of interest that passes for
Samsung's corporate governance.
The Samsung group, as it is often known, has no legal identity. The 83 firms sit under an umbrella
company called Everland, in which the Lee family has a controlling 46% stake. The family also has minority
positions in other Samsung firms, which often hold shares in other members of the group, and indeed in
Everland. For example, the family and related interests own 21% of Samsung's life-insurance firm, which
owns 26% of its credit-card business, which in turn owns 26% of Everland. Get it? Nobody other than the
Lees really does.
The company must change if only to avoid South Korea's devastating 50% inheritance tax after the elder
Lee's passing (his father died at the age of 77). That would further whittle the family's stakes, notes Shaun
Cochran of CLSA, a broker. He expects a holding company to be formed, so investors have clearer exposure
to the different parts of Samsung's businesses. The younger Lee will also need to root out corruption, which
his father often complained about without rising above it; the elder Lee's 2008 conviction for tax evasion
was pardoned in 2009 on the ground of his importance to the country.
When the dealing's done
Chairman Lee's fear is that successful companies get flabby when they hit middle age. He saw that in Sony,
founded in 1946, which has been struggling since the 1990s. Samsung Electronics turned 40 in 2009, which
prompted Mr Lee to lay the groundwork for the five new growth areas. Diversification is essential. In the
mid-1990s almost all of its profits came from DRAM memory chips: when the market soured in 1996, its
profits shrivelled by 95%.
Samsung may be swapping infotainment for lifecarebut it is still in the hardware business, and that
may leave it more vulnerable than it thinks. Many of today's computer and electronics giants are getting
out of the manufacturing businesses altogether. IBM has shifted to services, trailed by Japan's Fujitsu, while
Philips and Siemens both sold their IT businesses to focus on other areas. But getting out of things is not
something Samsung is good at. Despite a commitment to perpetual crisis, a mixture of implicitly subsidised
capital, weak shareholder pressure and family control has allowed it to stick too long with dodgy decisions
such as its move into cars, brought short only by the Asian financial crisis, and its only-now-ended
commitment to hard-drive manufacture.
Even with a $20 billion bankroll, bets can be spread too thin. Perhaps the biggest risk for Samsung is not
that none of its wagers will win, but that it won't be able to stop betting on the ones that don't. Knowing
the right time to bet is a great gift. So is knowing the right time to walk away.