Posted July. 19, 2005 03:22,
The printer business of Samsung Electronics is emerging as a new future growth engine for the company, continuing its rapid growth.
The size of the worlds printer market is estimated at about 100 trillion won. Unique among Korean companies, Samsung Electronics is growing its presence in a market which the U.S. (HP) and Japan (Canon, Epson) have dominated. In particular, the company is threatening the traditional major players, with its pace of growth as rapid as that of its cell phone business.
Printers are evolving into a complex instrument, combined with TVs and cell phones, adding to their traditional role of simply printing out computer files. Color laser printers are quickly replacing black-and-white printers.
From Liability to Growth Engine-
Samsung Electronics starting manufacturing fax machines and printers in 1983 and developed its independent laser printer technology in the mid-1990s.
However, its initial attempts to export printers based on that achievement was not successful. The reasons for Samsungs failure were a wide technological gap between itself and U.S. and Japanese competitors, and its low brand recognition.
Samsung made a second attempt to enter overseas markets in 2000 after nurturing its technological prowess by spending seven to eight percent of its revenue on research and development every year. (The average R&D spending of manufacturers stands at four percent.)
The result was a huge success.
Exports of its own brand increased to 2.2 million units in 2004 from 220,000 units in 2000, while the market share of its black-and-white laser printer reached 11.6 percent, bringing the company to second place in the world market.
In particular, the market share of its color laser printer, which is expected to grow rapidly, rose to 4.7 percent in the first three months of this year, up from 0.7 percent in the fourth quarter (October to December) of 2003.
The key to the growth was a successful reduction in size and an improvement in performance by applying the companys semiconductor technology to its new printers.
Samsungs Goal: To Create a Growth Industry Like Its Mobile Phone Business-
CSFB, a U.K.-based investment bank, said in its recent report, There were few people five years ago who expected the cell phone business of Samsung Electronics to become this successful, predicting, The printer business will establish itself as a new growth engine for the company over the next five years, demonstrating a similar pace of growth as its mobile phone business.
Samsung Electronics share of the world mobile phone market is forecast to go up to 15 percent (sales: 18.87 trillion won) this year from eight percent (sales: 7.055 trillion won) in 2001. The market share of its printer business is expected to rise to 8.0 percent (sales: two trillion won) from 3.7 percent (sales: 600 billion won), during the same period.
CSFB said that the operating profit rate of Samsungs printer business stands at five to 10 percent, lower than that of HP (16 percent) and Canon (22 percent). But it also predicted that the rate will increase to double-digits thanks to an increase in exports of Samsungs own brand, a decrease in royalty payments, and growth in the proportion of its usable product sales.
Shin Hyun-dae, executive director of Samsung Electronics digital printing division, said, A sale of a printer brings about a very large demand for printer replacement products, including cartridges, and the profit rate on those items is high, adding, Well reap big profits from printer supplies because Samsungs printers are spreading quickly in the world.