Samsung Chairman Asks Employees for Innovations Amid Challenges From Apple

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Samsung’s (SSNLF.PK) chairman recently told his employees that the company must “adopt new ways of thinking” and not simply concentrate on hardware in order to maintain growth, according to notes obtained by Bloomberg. Although Samsung recently posted record quarterly earnings, its share price also declined for the first time in five years.

“We have to change once again,” said Chairman Lee Kun Hee, per Bloomberg. “We must give a bigger push for innovations, including in business structure, so that we can lead industry trends.”

Samsung is Apple’s (NASDAQ:AAPL) biggest competitor in the worldwide smartphone market. According to data from market research firm Gartner, Samsung accounted for 32.1 percent of worldwide smartphone sales in the third quarter, with more than 80 million units sold. Meanwhile, Apple secured a 12.1 percent share of the global market with over 30 million units sold. However, the California-based company has also consistently taken the lion’s share of the smartphone market’s profitsApple Insider reports.

Despite Samsung’s majority share of the global smartphone market, concerns about the increasing saturation of developed smartphone markets led LIG Investment & Securities Co. to lower its predicted share price for Samsung by 7.9 percent, Bloomberg reports. The strong South Korean currency has also limited Samsung’s overseas earnings. Per Bloomberg, the Korea-based company derived approximately 85 percent of its sales from overseas markets in 2012.

Samsung has also faced several challenges from Apple in courtrooms around the world. Apple recently won a major victory against Samsung in the United States when a California jury ruled that Samsung must pay the iPhone maker more than $290 million in damages for 13 products that were found to be infringing on five of Apple’s patents. Along with the damages awarded from last year’s trial, Samsung now owes Apple approximately $930 million. Samsung has also lost court cases in its own home country. The Galaxy S4 maker’s patent infringement claims against Apple were recently rejected by Korea’s Seoul Central District Court, Reuters reports.

Lee acknowledged the company’s history of smartphone legal battles in his recent comments. “Our leading businesses are constantly being chased by competitors, while time is running out for our less-competitive businesses,” Lee said, according to Bloomberg. “Last year, we engaged in do-or-die battles with companies around the world and endured patent wars in light of market slowdown and prolonged, weak global economic growth.”

Besides facing challenges from Apple, Samsung may also soon be feeling pressure from other Android smartphone vendors. Google’s (NASDAQ:GOOG) Motorola Mobility recently announced that it was dropping the starting price of its contract-free flagship Moto X from $550 to $399. Samsung’s contract-free Galaxy S4 currently starts at $599.99 at Verizon (NYSE:VZ). Samsung’s earnings will be revealed when the company releases its preliminary earnings on Tuesday.

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