Samsung bets on smartphone with zoom appeal

SEOUL—Samsung Electronics Co., a dominant player for an array of tech products from chips to smartphones, has a weakness: digital cameras.As sales of point-and-shoot digital cameras continue to decline, the Korean technology giant is eyeing a technological shift to grab more market share.
The bet is on the convergence of smartphones and cameras. On Wednesday, Samsung unveiled its Galaxy S4 zoom, a new version of its top-of-the-range smartphone containing a high-quality camera with an optical zoom that extends out of the body of the phone.
Smartphone cameras have improved in recent years, but resolution and zoom quality continue to trail dedicated cameras. Samsung is testing the idea that a high-quality camera can now be packed into a smartphone that’s slim enough to appeal to finicky phone customers.
Sharing the same basic software as the company’s Galaxy smartphones, the device comes at a time when the camera industry is struggling with plunging sales of digital cameras. By 2016, the digital camera market will be three-fifths of what it was at its peak of nearly 145 million units in 2010, research firm IDC estimates.
Digital cameras are one of the few business segments where Samsung has failed to replicate its successful model of evolving from fast follower to market leader with its formula of hefty investments, efficient production and distribution, and savvy marketing.
Samsung has capitalized on technological shifts in products previously to vault ahead of competitors, eclipsing Sony Corp. during the transition from bulky cathode-ray tube televisions to flat panel models and passing Nokia Corp. in the move from feature phones to smartphones.
Lim Sun-hong, a senior vice president with Samsung’s digital imaging business, said he sees an opportunity to combine the ease of use and wireless connectivity of a smartphone with the picture quality of a powerful camera. The technology allows consumers to quickly share high-quality photos online.
“We see there is huge, huge potential and an opportunity for us, if we combine smartphones’ usability, portability, and connectivity to our camera industry,” Mr. Lim said in a recent interview.
Samsung entered the camera business in 1979, initially working with Minolta to produce a model called the XD-5. In 1986, Samsung released its first Samsung-only camera called Winky.
When cameras shifted from film to digital, the company pushed more aggressively into the category with new concepts such as its two-screen cameras with a display on the front and back of the camera to help people photograph themselves.
But Samsung has failed to dent the dominant market position of leaders Nikon Corp. and Canon Inc. According to IDC, Samsung’s market share in the digital-camera market was 9.4% in 2012, trailing behind Canon’s 22.6%, Nikon’s 20.9% and Sony’s 14.8% share.
Samsung doesn’t break out the performance of its camera business, although analysts estimate that the business is in the red. Results from the camera business are lumped together with the mobile business, which generated nearly three-quarters of Samsung’s total operating profit in the first quarter.
Samsung in 2009 introduced its first Wi-Fi connected camera. And last year, it developed a new camera under the Galaxy brand, adding a 3G connection and marrying a traditional camera with Google Inc.’s Android operating system and its network of apps including photo-sharing services such as Instagram.
The idea of having a Web-connected camera isn’t new. Google Senior Vice President Andy Rubin, the creator of the Android operating system used by Samsung, said at a conference in Tokyo in April that the open-source platform was initially designed for digital cameras, not smartphones.
But Samsung’s Mr. Lim said the fact that so few cameras connect to the Web is another sign of an industry that has grown complacent. He said the camera industry presents a classic case of “innovator’s dilemma” with market leaders unwilling to introduce new products that may threaten traditional cash cow products such as the digital single-lens reflex, or DSLR, cameras. With little market share to protect, Samsung can afford to take more risks, Mr. Lim said.
“Samsung is kind of in a good spot because you don’t want to be good in cameras and lousy in mobile,” said Chris Chute, research director at IDC. “It’s better to have it the other way around and sort of use what you’ve developed in imaging to supplement your mobile business.”
(Write to Min-Jeong Lee at and Daisuke Wakabayashi at
(Source: Wall Street Journal via Google News)

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