Samsung Electronics' chairman, Lee Kun-hee, is calling for his company to forget its old business models and focus on a new wave of software innovation. As The Wall Street Journal reports, Lee used his annual New Year's speech to urge the company to "get rid of business models and strategies from five, ten years ago and hardware-focused ways." To achieve that, he wants the company's massive research and development centers to "work around the clock, non-stop."
Lee's speech comes just a day after Samsung's market cap dropped by over $6 billion amid analyst forecasts that company profit growth will fall to under 10 percent this financial quarter. Samsung's profits have grown spectacularly in recent years, and although the company is still outperforming its peers, investors worry that its continued expansion is being stifled by stiff competition and a lack of innovation.
Samsung has been accused of following other companies into existing markets, flooding the market with alternatives rather than producing innovative products. Its strengths lie in being able to quickly and cheaply research, develop, and manufacture hardware in a stupefyingly broad range of product categories, but it doesn't win many awards for its software. Every year the company rolls out more software features; its current Galaxy S4 flagship features a dizzying array of add-ons to Google's Android OS, including head-tracking, hand gestures, and dozens of camera options, but such additions are often written off as gimmicks, rather than praised as valuable features. It's unclear if this new focus on software will yield similar results or genuine innovation, but investors will be hoping for the latter option.