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Samsung chief wants acquisitions to boost software skills

Tells top executives to accelerate software programs, but strengths still lie in hardware innovations like HD screens

By CAROLINE GABRIEL

Published: 18 August, 2011

READ MORE: M&A | South Korea | Samsung | Application Environment | Display | Android

The main Android vendors have been carefully neutral about Google's plan to buy one of their number, Motorola Mobility. But behind the scenes the firms are said to be drawing up plans already to ensure their offerings are well differentiated even if Motorola gets favourable treatment in future - or to hedge their bets on other operating systems too. Samsung's chairman Lee Kun-hee has called on senior executives to explore options for expanding the firm's own software platform, including possible acquisitions of its own.

It seems that Lee is looking to protect his firm against possible negative effects of the deal, even though, in official statements, Samsung has said the acquisition would strengthen the whole Android base (and it may hope that Google will make such a mess of running Motorola that one competitor will effectively be neutralized). "Chairman Lee told top managers to come up with various measures including M&As to enhance software competitiveness," Kim Soon-taek, head of the Samsung Group office, told reporters, as reported by the Reuters news agency.

According to insiders who spoke to the Korea Herald, Lee called a meeting on Wednesday with top managers and told them that Samsung needed to enhance its software competitiveness to match the hardware advantages the company enjoys. The firm has been going down this road for a couple of years, creating its homegrown operating system, Bada, for midrange smartphones; making the TouchWiz user interface increasingly strategic; and creating various app and content stores. Lee reportedly told the meeting: "We must pay attention to the fact that IT power is moving away from hardware companies such as Samsung to software companies."

For now, Samsung's mobile strengths are in hardware and it has significant resources to throw against a strengthened Motorola. Unlike most OEMs apart from Apple, Samsung has the cost and control advantages of controlling some of the key components of its products, increasingly going inhouse for its touchscreens, memory and processors. The quality of the touchscreen is a key differentiator for smartphones and tablets, and Samsung plans to move the goalposts once more. The Korean firm has an iron grip on the cutting edge of mobile displays with its Super AMOLED Plus technology, and now it aims to shrink full-sized HD screens to fit mobile gadgets.

The resulting Super AMOLED HD is expected to arrive in tablets and large handsets by the end of this year, targeting screens of over 5-inches. At 1280 x 720 pixels, it will convincingly trump the 960 x 640 resolution of Apple's RetinaDisplay. As with other Super AMOLED breakthroughs, it will be an exclusive for Samsung's cellphone unit, rather than being offered to its third party customers, indicating the rising importance of controlling the mobile supply chain.

According to Ron Mertens of OLED Info, who spoke to Samsung suppliers: "We can expect 5-inch to 6-inch smartphones in fall 2011 (the first will probably be the GT-I9220 with a 5.3-inch display) and 7-inch tablets by the end of 2011." Merten's sources suggest that the Super AMOLED price premium is now around 20% over Super LCD at the same size.

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