The South Korean electronics giant knows it lacks strength in the mobile software field and understands that to better compete with rivals such as Apple, Google and Amazon it needs to offer better software/hardware and software integration with its flagship smartphones and tablet devices. And the company’s top brass thinks the way to go ahead is to go shopping for potential software companies rather than build its own workforce.
“The message we’re getting from the top is to raise software capability, and buy rather than build, if needed,” Kang Tae-jin, senior vice president of Samsung’s Media Solution Center, said in an interview. “Our focus on software is primarily aimed at driving hardware sales, rather than making money. We have a full range of handsets in so many countries, and, to better market our products, we thought it’s better to start our own software business.”
Acquisition of a smaller company or startup by a giant for the benefit of the acquirer is a well established business tactic. This brings with it major advantages such as speeding up the process of development and growth for the acquirer, eliminating competition or getting an edge over its rivals. All major tech companies, including Apple, Google, Facebook and even Samsung have taken this path of growth.
Back in May, Samsung acquired a small online music service provider, mSpot and subsequently developed Music Hub. A service to counter Apple’s iTunes, Google’s Music Player and Amazon’s Cloud Player. However, Samsung has not reached the level of success it expected. The company’s aim is to take Music Hub to the top-four position in digital music services and the way to do it would be to acquire already established and popular music service providers such as Pandora or Spotify.
“We want to grow the Music Hub to rank in the world’s top four services within three years in both revenue and subscriber numbers. And to shorten the time, we’re ready to do more acquisitions, if needed,” Tae-jin said.
“Mobile business is what Samsung is doing really well, and as a result we have deep pockets. We are very serious about content business, as we showed with the acquisition of mSpot.”
The executive however, did not provide names of potential target companies that Samsung is interested in acquiring.