Analysis, Breaking, Business, News, Samsung, Smartphones, Virtual Reality (VR)

Samsung’s New Strategy: VR First

Over the past decade, we’ve heard ‘Mobile First’ mentioned by all major CEOs, with companies shifting their focus to ‘Mobile First’, a strategy where development of solutions for mobile devices takes precedence over everything else.

Mobile First saw the rise of ‘client lite’ computing, but not in a way IBM and Oracle have hoped, with the major benefactor being Intel – its x86 servers powered almost every cat video you saw on your favorite social network. The dawn of mixed reality will require completely different focus. While delivering content on a small surface screen was nothing more than shifting the desktop and communication from the workplace, the advent of Virtual and Augmented Reality changes everything. You have to incorporate significant graphics capabilities as well as processing capabilities, thus the hardware will have to orient itself on ‘chasing the pixel’. Read – 8-core smartphone is ridiculous if it does not contain at least 10x more compute power for graphics.

Smartphones Out, VR First

Back in 1980s, nobody would expect that a South Korean company could take over the world of TVs and appliances. Yet, Samsung Group did exactly that. Now, the conglomerate is making a massive corporate shift – organizing a series of Presidents Conference Meetings in different business units, and making changes on a teutonic level. Last month, Samsung Chemical underwent a complete corporate reorganization. The chemical business is being spun off and the new Chemical BU will focus solely on designing batteries for transportation devices (auto, truck, bus, airplane, ship), bringing the improvements into the world of mobile devices as well (notebook, tablet, smartphone, VR equipment). This is an almost eight billion dollar gamble, i.e. more than 50% of what Tesla and Panasonic are doing with their Gigafactory (est. $5 billion).

Samsung GearVR is just the first VR device from Samsung. The company plans to launch much more as a part of its "3 Steps" strategy.

Samsung GearVR is just the first VR device from Samsung. The company plans to launch much more as a part of its “3 Steps” strategy.

On February 17th, 2016 – time came for the Presidents Conference Meeting at Samsung Electronics, which we all know for their computers, Galaxy smartphones, TV’s and many more. In Samsung Electronics building in Seocho-dong, Koo Yun-mo (Executive Director, Technology Strategy Group, Samsung Electronics) presented a vision which was later adopted by the board.

Board consisted out of:

  • Lee Khun-hee, Chairman, Samsung Group
  • Oh-Hyun Kwon, Vice Chairman & CEO, Samsung Group
  • Lee Sun-jong, President, Samsung Venture Investment
  • Park Dong-kun, President, Samsung Display
  • Kim Bong-young, President, Samsung C&T Resorts
  • Chun Young-hyun, Samsung Electronics Memory Business Department
  • Yook Hyun-pyo, President, S1
  • Hong Won-pyo, President, Samsung SDS Business Solutions

Thus, the vision of Samsung is to move away from pure hardware business and mobile devices where profit margins are low. The new Samsung Electronics strategy calls for:

“3 Steps are Needed: Filming, Sharing and Spending Content,” said Koo. “Samsung Electronics goal in VR is to provide a variety of high-quality contents and to secure competitive edge in our products and services.”

In the post-mobile world, Samsung Electronics will produce devices and invest in businesses that can take full advantage of its platform, and embed the needs of content creators into its devices. President Kim stated that the VR “can enhance the travel experience” and that C&T Resorts will look into adopting the GearVR and future VR products. Does this mean VR is coming to hotel rooms and airplanes? That future is already here, thanks to XLAirways and Cedars-Sinai Medical Center.

“VR First” strategy is already in motion. Over the past six months, Samsung invested between 75 and 100 million USD in VR focused companies:

  • $13.5 million in 8i, New Zealand-based ‘middleware and tools for VR’ company
  • $6 million in Baobab Studio, U.S. VR content producer
  • $4.6 million in Bubble, Canadian 360 degree camera manufacturer
  • $X.X million in Interlude, U.S. based firm that produces reaction-type content
  • $XX.X million in Fove, Japanese VR firm that tracks eye
  • $25 million in WEVR, content distribution network dubbed ‘YouTube of VR’