Wednesday, November 5, 2008

Sony Vs Samsung

Sony is my best brand since 1976.... when I bought the Betamax VCR Recorder, Walkman, first Diskman, first VCD Player, first DVD player... over the time, there is an emgerging giant of Electronics Brand came with Goldstar in the 80's , then changed the name to Samsung later.

This company was having some quality issue with their early product, now no one has any question on their product and usually I find more feature, funcion and quality in the same product range under the same product as comparing with the Japanese product!

When I viisted book store, I found out one of the insider story from this great book Sony Vs Samsung whihc contains a lot of insider stories about these two big companies!

Prince and Pauper in the Analogue world

There are only two ways for Sony to avoid imitated by others; one is to set product standards on our own and the other is to have mechatronics, embodying our craftsmanship.

- Noria Ohga, former CEO of Sony

Compared to other semiconductor products, the design technology of DRAMs is not so complicated, but the market for DRAMs is fairly large. We decided to focus all our resources in one product where we could do well. We had to take a lot of risks. In addition, fortune was on our side. The timing was great.

President Yoon-Woo Lee,
Semiconductor Division of Samsung Electronics

In 1987, Samsung’s investment in DRAMs started to pay off. That year, the U.S. government raised an anti-dumping suit against Japanese semiconductor manufacturers. In the wake of this accusation, the U.S. Government and Japanese manufacturers reached a voluntary export restraint agreement to the United States.

Soon afterward, the price of DRAMs began to rise. Demand for the 256K DRAM grew especially rapidly, but Japanese producers had already reduced or closed the 256K production line or shifted much of their capacity to the 1M DRAMs, believing that the 256K production lines were outdated. In contrast, Samsung’s main DRAM product remained strong on the 256K Chip.
Samsung’s profit surged, in 1988, Samsung’s profit were large enough to offset all its cumulative losses. In fact, Samsung’s investment in manufacturing facilities in 1987 contributed to its success in the semiconductor boom, which continues into the early 1990s.

This success was possible because Samsung management believed that only by investing during recessions could be the company reaps great profit during the boom period!

The technological and product profolios of Samsung Electronics are very different from Sony’s. Samsung Electronics invests in technologies that have clear trajectories with clear evolutionary progress and industrial standards. Even the late-comers can succeed in such businesses.

Also, Samsung has taken Moors’ law to heart, the principle states that degrees of integration doubles every eighteen months, by doubling its efforts in R &D to develop new products according to this schedule. This effort provided a very simple and unified goal for all Samsung employees.
For example, because the 256M DRAMs would be the next-generation DRAMs within 18 months after 128M DRAMs, the only mandate would be to develop 256M DRAMs within 18 months, having all its employees committed on this single goal.

Similar trends exits in many of Samsung Electronics’ other businesses, For instance, there is a trend called “Hwang’s Law” in the flash memory sector, named after President Chang-Kyu Hwang of Samsungs’ Semiconductor Division. This states that the degree of integration doubles annually.

In other areas, such as Samsung mobile phones, Samsung has become leader at rapidly adding new features (such as cameras and MPS player), miniaturizing technology, and reducing costs, As a result, the life cycle of mobile phones has become shorter and shorter. Just like DRAMs.

Similarly, LCDs have a clear technological development, increasing the panel size while improving its yields.

In short, Samsung has invested in businesses for which it could have the highest return given its resources level, and unlike Sony, it has not hesitated to source technology from other firms and other countries, it has been only in the last 15 years that Samsung Electronics has begun to develop technologies in-house.

Speed is the key to all perishable commodities from sashimi to mobile phones, Even expensive fish becomes cheap in a day or two. For both sashimi shop and digital industry, inventory is detrimental and speed is everything.

- Jong-Yong Yun, CEO of Samsung Electronics

Samsung’s Success story:
A result of focus investment on future product meets the foreseen trend of product cycle!

Sony’s failure story:
Too narrow on vision on the company direction and too slow to react to the market with most of the industry standard and users are expecting. Swimming alone against the tide is tired for Sony!

… to be continued
Referral: Sony Vs Samsung, the inside story of the electronics giant’s battle for global supremacy. By Sea-Jin Chang (ISBN 978-0-470-82371-2)

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