A suggested answer to Samsung’s profit woes

Samsung recently reported lower than anticipated profits for the first quarter of 2007.

“While operating profit came in slightly below market consensus, this shortfall was limited to weaker than expected performance in the semiconductor business,” said Lee Keonhyok of Samsung’s investor relations department in a telephone conference call. “While not making any excuses, it’s fair to say weak performance of semiconductors was reflected by a marketwide decline in DRAM and NAND prices.”

Reading through the business-speak, Samsung’s lower profits are due to their being exposed to a commodity business. Where the profits are is in the value-added business.

Samsung Q35 RedLike red laptops.

I seem to be spending more and more time on my little hobby. And I can’t do all my daily posts at work, or else my boss would spot a decline in my productivity. So obviously I have to spend a fair amount of time at home hogging the Dell Inspiron laptop as I research, browse and draft. Which means that Louise can’t do her garden designs.

So off she went to Peter Jones the other day and browsed through their stock. And looking through the various machines on offer, she discounted a slightly clunky-looking pink Sony Viao, and selected a slick-looking machine by Samsung. And it happened to be red. It was a Q35. There was a silver model for £700 and a red model for £800. There were a few more ccs under the bonnet for the red one, but fundamentally it was the same machine. And it is such a gorgeous deep lacquered colour that it had to be bought.

Except that Peter Jones didn’t have any in stock, so it had to be ordered. And a few days later the nice people at Peter Jones rang up to say that Samsung had discontinued it. To cut a long story short, and may the good Lord forgive us, we bought one over the internet from Tescos, who still had one left.

But why, when charging an extra 14% for a product simply because it’s a nice colour, would you want to discontinue that product? I can’t think that there’s a sensible answer to this one, but maybe there will be an insight in Tom Coyner’s book on doing business in Korea. It’s now getting to the top of my reading pile, so if I find the answer I’ll let you know.

Hyolee Samsung adBut can I recommend to Samsung to bring out a purple Q35? A nice deep rich purple. I’m so jealous of Louise’s red one that I’d certainly pay extra for a purple one.

And also, I’m still waiting for Hyolee to hand-deliver one of those nice Samsung Anycall phones (right).

Links:

  • Samsung first quarter results press release
  • International Data Group story on Samsung results

Samsung Q35 Red (2)

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