Manufacturing in the Content Economy: Samsung's Challenge

Samsung Electronics seems far removed from the content economy, but it's anything but. Content is invading nearly every aspect of products and manufacturing these days. As a maker of mobile phones, televisions, camcorders, Blu-Ray players, appliances and other electronic devices, Samsung is dependent on its products not just playing the content flowing through the global economy, but enhancing it for the consumer wherever possible.

"All of us fear being commoditized," Omar Khan said. Mr. Khan is the senior vice president of strategy, product management, and customer service at Samsung Telecommunications America. He followed former Disney CEO Michael Eisner with his keynote at AMR Research's Supply Chain Executive Conference today.

"Whatever it is we do, it has become a level playing field for everyone. When a company like Google or Apple can make a cellphone, it's changed. They aren't companies that are creating hardware, they are creating the content that creates those devices, which are then manufactured by someone else in Taiwan. Our challenge, all of us, is how do we innovate and make money doing it so we don't become commoditized?"

So what is a manufacturer like Samsung's role in the global content economy? Create products that enrich end-consumer experiences.

"Discoverability and usability, if you can solve those two equations in any business, you win," Mr. Khan said. "If people can find what they want, and don't have to go three screens down, you win." And if the device they are using to get there is highly usable, you win more.

Consumers have become way too sophisticated for old manufacturing models. Today's manufacturer must be in tune with the consumer, paying attention to their wants and their needs and creating products that not only deliver on those needs but enrich them. "10 years ago you were buying a TV by what size it is. Today, your average consumer is asking about lumens, contrast levels, and black levels." And it's up to manufacturers to respond. "When a consumer walk into a store, they are looking for an experience and it's up to us to provide it."

Consider the following data regarding mobile device usage:

• 19% of teens update social networking sites via a mobile phone up from 0% just two years ago.
• Wwireless only households grew 17% in the first half of 2008, tripling in three years.
• Up to 37% of teens are regularly browsing on their mobile devices

"People want the same experience on their 3-inch screen as they get on their 20-inch one," he said. To deliver in this new content economy, Samsung has stretched beyond just making devices to creating a platform that developers can use to add valuable content. It is also innovating in how well its products work such as creating easier to use keyboards and screens that are readable in bright sunlight. It's optimizing for 4G technology and the increases in video streamed to mobile devices. In short, it's keeping its hand on the pulse of consumer demand to deliver a rich experience in the content economy.

And Samsung has formed tighter partnerships with companies Best Buy, Verizon, AT&T, and other providers. "We aren't just delivering to them, but working with them to bring good experiences to everyone for all our benefit," he said. "We continue to challenge ourselves, engaging developers and engaging markets and consumers."

And that's how an electronics manufacturer becomes a captain in the content economy. Next up is Phillippe Lambotte, senior vice president of customer service and logistics at Kraft Foods, which is using the content economy to deliver on its brand promise.

Comments

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And Samsung has formed tighter partnerships with companies Best Buy, Verizon, AT&T, and other providers.

[Kevin O'Marah]

correct. plus the smarter device guys are all deeper than ever into content and/or service. cash for the initial product sale will eventually migrate toward total cash for lifecycle consumer experience - sort of like what GE initiated with power-by-the-hour in jet engines years ago.

[jk hong]

Yes, Samsung formed good internal/external collboration disciplines, like S&OP, CPFR.

[harris]

commoditization is a serous problem in any industry. combating it requires heavy investment in brand building, not merely technological innovation, for better or for worse.

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