Consumer Electronics: Here Comes Samsung

Techdirt:While Sony Tries To Become Apple, Samsung Tries To Become Sony. Consumer electronics is another one of those interesting markets where everyone is swapping and changing positions.

Samsung is a classic case of a low-end entrant moving upstream. This is in the grand tradition of a stealth play.

First, be at the low end of the consumer electronics market, make low-tier handsets that only could get sold for nothing or in many cases many dollars off.

Build manufacturing capability to become the low-cost producer and also develop an in-house software base. You stay under the radar screen of a Sony doing high brow products or a Matsushita doing high volume.

Also have a great home market where you can test ideas.

Final step is to start innovating faster than anyone else, suddenly your phones go from low- to mid- to high-tier.

And voila, you have the #4 phone manufacturer ready to become #2 in two years. That's Samsung.

What are the lessons:

1. Unless you're Apple with a great existing brand name, you are unlikely to hit it big with a great new product like the iPod in one try. So, go for the low end where the big guys don't care. Gain experience.
2. Develop a great culture for shipping early and often. That's what its all about in terms of moving ahead. Also once you have low-end distribution in place, you can just let the products shine.
3. Finally, when you ready with a good base, convert the stealth play into a drag race and aim for the market leader.

That is where Samsung is right now.