Samsung sets sights on corporate customers

January 9, 2013

Samsung went for commercial flash at the International Consumer Electronics Show this week with bendable screens, kitchen appliances controlled by smartphones, and razor-thin televisions.

But just as important was a less-glamorous announcement that the world’s largest smartphone maker is turning its attention to a new pocket of lucrative potential customers: corporations and government agencies.

At the CES show in Las Vegas, Samsung is touting a new platform, known as Samsung for Enterprise, that will allow businesses to control, secure and closely monitor the security of employee smartphones.

Samsung is attempting to muscle its way into the growing enterprise market, which is expected to reach $181 billion by 2017.

That’s bad news for BlackBerry maker Research In Motion, which has struggled to retain its place as the preferred platform for security-conscious customers and is attempting a comeback with a more consumer-friendly mobile operating system.

When it comes to security, Samsung has some catching up to do. Its phones run Google’s Android mobile operating system, an open platform that comes with inherent security risks. In addition, Samsung’s version of Android has run into its own security problems. Last month, developers uncovered a bug in Samsung’s version of Android that opened up some of the phone’s most popular models to tampering. Another code loophole meant phones could be wiped remotely.

Samsung has said it is investigating both problems and has sent software updates to fix the bugs on some devices.

No smartphone manufacturer is immune to security bugs, said Chester Wisniewski, the senior security adviser for security firm Sophos. Samsung has to be more vigilant, he said, to bolster its chances of success in the enterprise market.

“If Samsung said all phones have this extra layer of security, they could have a serious enterprise advantage,” Wisniewski said.

That’s because, when it comes to consumer popularity, Samsung already surpasses BlackBerry. That opens the door for Samsung to solidify its position as corporations increasingly allow employees to choose the smartphone devices they use for work, analysts said.

“Clearly having the best security is not enough,” said Michael Sutton of the security firm ZScaler, otherwise RIM would be in a better position.

To retain its place at the top of the smartphone market, which it dominates with Apple, Samsung must continue to leverage a combination of responsive software and low manufacturing costs in South Korea to fend off competitors, analysts said.

“They’re still hungry; they’re still all about trying to be Apple,” said Bob O’Donnell, a technology analyst for International Data Corp.

That gave it and other South Korean firms such as LG an advantage over the Japanese firms that once dominated the consumer technology industry. Those companies ignored the rising importance of software and content, leaving Samsung an opening, analysts said.

That, too, was obvious at the CES, where analysts said companies such as Sony had to prove they could embrace the software side of the business to reverse their flagging fortunes.

Sony touted its newest televisions and smartphones at the show, even introducing a waterproof smartphone. Those devices should tell consumers that “Sony is really starting to get its mojo back,” Kazuo Hirai, Sony’s chief executive, told a Las Vegas audience this week.

But the effort fell short, said Forrester technology analyst James McQuivey. “If Sony wanted it to be a turning point, they needed to come with their best game,” he said. “They’re not paying attention to the fact that consumers are no longer enthralled by size or brightness of screen, but what the screen can do for them.”

Samsung’s software focus will likely insulate it against growing competition from Chinese firms such as ZTE that threaten to use the same cost advantages Samsung used to overtake Japanese firms against it. But Chinese firms, McQuivey said, have yet to develop the software chops to compete against companies like Samsung.

“Korea’s in a great position by timing,” McQuivey said. “Coming in as China and saying ‘we can do this at lower cost’ means building a tablet that looks like this or a phone that looks like that. But if it doesn’t satisfy the software expectations; it doesn’t do anything for them.”

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Hayley Tsukayama covers consumer technology for The Washington Post.
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