Samsung's secret? UbiquityAugust 13, 2012: 6:00 AM ET
The Korean technology juggernaut generates more revenue every year than Microsoft or Apple. And one central strategy has led to its phenomenal success.
By Don Reisinger, contributor
FORTUNE -- Companies become successful for different reasons. Apple, for example, married hardware and software to create premium products. Microsoft became dominant, in part, through hard-nosed pursuit of big business. And Google famously rose by letting data shape its products. Samsung has taken another route: ubiquity.
The South Korean giant has gone after nearly every corner of consumers' homes, from the kitchen to the living room. At the 2012 Consumer Electronics Show, Samsung won 30 innovation awards for the breadth of products it put on display. And at the 2012 iF Design Awards, which aim to reward beauteous industrial design, the company garnered 44 coveted accolades. On Fortune's most admired companies list, Samsung ranks above Intel (INTC), General Mills (GIS), and Unilever (UL).
Not much surprise then that Samsung generates more revenue every year than Microsoft (MSFT) or Apple (AAPL). Or that, by the end of 2011, Samsung was the world's top TV maker, earning 22.5% market share. In the display monitor market, it was first with 15.1% share. Samsung also owns some 13.5% of the worldwide refrigerator market. And in washing machines, its market share has grown from 7% in 2009 to 9.2% last year. Even in laptops, where giants like HP (HPQ) and Dell (DELL) dwarf it, Samsung has watched its market share nearly double to 6.3% in just a few years.
Not surprisingly, Samsung's sales are up. During the second quarter of 2012, Samsung generated $42.2 billion (47.6 trillion Won), representing a 21% gain over the same period last year. Its profit hit $4.6 billion, up 48% compared to 2011. Nearly all of Samsung's sprawling divisions saw gains, including a 60% jump in its IT and mobile communications business. Operating profit in its digital media and communications operation rose 124%.
Samsung is especially unique in the mobile market where it enjoys an immense following. According to recent data from Canaccord Genuity analyst T. Michael Walkley, Apple and Samsung shared 108% of the operating profits generated last quarter in the mobile space. (The companies were able to nab more than 100% because of the losses incurred by competitors.) Samsung's mobile popularity was further proven last month when the company announced that it had sold 10 million Galaxy S III units in less than two months. The figure pales in comparison to the number of iPhones Apple sells, but dwarfs competitors.
Of course, Samsung faces plenty of possible obstacles. It has no doubt benefitted from the travails of Nokia (NOK) and Research in Motion (RIMM). But there is a lingering threat that Google (GOOG) will release an ￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼￼"absolutely amazing product" -- in the words of one excited analyst -- that would upend the Android market. And, of course, Samsung is locked in a patent dispute with Apple over claims that it copied the iPhone maker's mobile products. Naturally, Samsung disagrees and launched its own patent-infringement claims against Apple's products.
Still, Samsung has found a way to infiltrate the home by way of refrigerators, washing machines, televisions, and a host of other products. In other words, Samsung has created a "brand" – a much touted but hardly understood term thrown around by marketers. And that brand, at least for now, seems to resonate with consumers across a host of markets.