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Samsung replaced its longtime handset chief, J.K. Shin, with another executive as the global smartphone leader continues to seek a strategy to get itself out of a pattern of disappointing financial quarters.
Shin will give up his day-to-day handset role to Dongjin Koh, who takes over as president of the company’s mobile communications business, according to a Nov. 30 report by Reuters. Koh previously headed Samsung’s mobile research and development department and played an important role in the development of premium devices such as the Galaxy S6 and the Galaxy Note 5, the story reported.
Shin will stay with the company as the head of the overall mobile division for Samsung Electronics, focusing on long-term strategy and developing new growth businesses, Reuters reported.
In October, Samsung, which had been the victim of a series of disappointing financial reports over the last seven quarters, reported revenue and operating profits for the third quarter of 2015 that are were up 8 percent and 37 percent, respectively, from the same period a year earlier. That was the first positive financial news for the company in quite a while.
In its Oct. 29 earnings report, Samsung announced third-quarter revenue of $45.2 billion (51.68 trillion Korean won) and an operating profit of $6.4 billion (7.39 trillion KRW), which were up from the $41.6 billion (47.45 trillion KRW) in revenue and $3.6 billion (4.06 trillion KRW) in operating profit posted in the third quarter of 2014. The latest quarterly revenue was up about 6 percent from the second quarter, when the company posted revenue of $42.5 billion (48.54 trillion KRW).
Despite the better numbers, Samsung’s mobile unit continued to underperform as operating profit for the unit fell 13 percent to $2.1 billion (2.40 trillion KRW) from $2.4 billion (2.76 trillion KRW) in the second quarter.
Several IT analysts told eWEEK that Shin’s job change came because Samsung had to do something to try to revive its performance.
“It’s a tough market and someone has to take the fall when things don’t go as planned,” said Maribel Lopez, principal analyst at Lopez Research. “It’s not surprising. What’s interesting is that Samsung is considered the leader in the space, but even it is struggling with sluggish demand.”
Charles King, principal analyst with Pund-IT, said he doesn’t consider the change to be a demotion of Shin. “Shin remains president and co-CEO of Samsung’s electronics organization, meaning that he still has the confidence and respect of the company’s core leadership,” said King. “Moreover, it’s arguable that Samsung’s mobile phone business is in a far more stable and workable state than it was when he came onboard.”
Koh “is an interesting choice for Shin’s replacement” because of his background in software with Samsung Pay and Knox, and for his work in building relationships with software-centric partners, including Google, Microsoft and Wacom, said King. “Koh’s ascent could signal that Samsung believes that software will be more important for innovating and differentiating future smartphone products than hardware. Given the continuing lack of hardware innovation among smartphone vendors, including market leader Apple, that could be a winning strategy for Samsung.”
Rob Enderle, principal of Enderle Group, said that “pretty much every Android phone maker is struggling,” but that Samsung remains the strongest of the bunch. “Given this, you could argue the platform is the problem; however, they can’t fix Google so they addressed the poor performance by fixing the Samsung leadership.”
What remains to be seen, however, is whether “they fixed the part that wasn’t broken instead of focusing on the part that clearly is,” said Enderle. “This showcases the problematic [strategy] of focusing on blame rather than doing true causal analysis to determine what the problem is and then resourcing that. In the end, that is likely what Samsung’s mobile chief should have done and, ironically, while the problems aren’t his fault, not properly focusing the company on them cost him his job.”
Ezra Gottheil, an analyst with Technology Business Research, said that while Samsung “showed great foresight in committing to the smartphone market totally and quickly,” it failed to understand that its products were not greatly differentiated from those of other Android vendors and wouldn’t lead for the long term without constant innovation.