Samsung Electronics Co., Ltd. (KRX:005935)’s rise to the top of the global smartphone market has been nothing short of breathtaking. Over the past three years, the South Korean conglomerate has grown its share of the global smartphone market from just 4.3% in Q1 2010 to 29% in Q4 2012. Meanwhile, Apple Inc. (NASDAQ:AAPL) has seen its share increase from 15.7% to 21.8% over the same time.
While Apple’s focus has always been on product depth, releasing one iPhone model per year, Samsung’s is the polar opposite; it releases dozens of new models each year. The company then focuses resources on the ones that begin to gain traction, putting its enormous marketing budget behind successful devices.
Case study: HTC Corp (TPE:2498)
The importance of Samsung’s marketing to its success is evidenced by its growing lead over HTC. Once upon a time, HTC was the champion of Google Inc (NASDAQ:GOOG) Android, with its global market share peaking at 11% in mid-2011. When the Taiwanese OEM’s fortunes began to fade at the end of 2011, HTC quickly decided to heed an Apple lesson and focus its product strategy with its new One campaign.
HTC slimmed down its broad product line into three models within the One family: the X, V, and S. By most accounts, the One X was superior to the Galaxy S III in numerous ways, including overall build quality. Unfortunately for HTC, the One X did very little to turn its fortunes around. Instead, Samsung Electronics Co., Ltd. (KRX:005935) continued to rise, in large part due to its marketing budget, which totaled an incredible $11.9 billion last year (some of this is related to commissions, promotions, and rebates).
In January, HTC CEO Peter Chou told The Wall Street Journal, “Our competitors were too strong and very resourceful, pouring in lots of money into marketing. We haven’t done enough on the marketing front.” Chou has now hired a new marketing chief to help it improve in that department. The new chief certainly has some work to do, since some of HTC’s recent ads have just been strange.