Samsung Electronics (005930) appears to be taking stock of its situation after a California jury ordered the South Korean electronics giant to pay $1.05 billion in damages to Apple (AAPL) for violating patents pertaining to the iPhone and iPad.
James Song, an analyst at KDB Daewoo Securities, told The New York Times: "The ruling makes us reconsider the brand value of Samsung because it depicts Samsung as a copycat."
"But a copycat or not, what Samsung has done with its smartphones was a brilliant move. Look what has happened to companies like Motorola and BlackBerry, which didn't do as Samsung did. Samsung may lack in innovation, but right now, no one can beat Samsung in playing catchup," Song added.
The New York Times noted how the South Korean media keenly monitored Samsung's tussle with Apple, with the former being the largest company by sales and the latter the No.1 company by market value.
The very name "Samsung" evokes strong emotions among South Koreans as it is seen as a symbol of their country's transformation from a war-ravaged agrarian society to a global technology powerhouse.
Samsung timed its entry into the global market after Japanese companies, which were the first to introduce flat-panel televisions and high-end mobile phones.
The first strategy adopted by Samsung appears to be building a product similar to that of another company but faster, better and at a lower cost. This worked well as the market was soon flooded with a wide range of models that were constantly updated at a speed its rivals found hard to match.
Drawing low-cost loans from the government-controlled banking sector also worked in its favor, and now Samsung can instead tap its own cash-rich coffers.
Anthony Mitchell, author of "Samsung Electronics and the Struggle for Leadership of the Electronics Industry," noted that "Koreans do things quicker than almost anyone. This allows them to change models, go from design to production faster than anyone at the present time. Korean companies continually set themselves challenges, like the challenge to overtake Sony in terms of brand value in the past."
Kevin Lee, an analyst at Korea Investment and Securities, told the Times: "The patent ruling and Samsung's copycat image will have a negative impact on Samsung's sales of cellphones and other products. But Samsung will further widen the gap with Apple in the third quarter, though not as much as expected before the ruling."
Though Samsung is appealing the verdict, which it calls "a loss for the American consumer," Song declared that despite the verdict, the fight for the smartphone market was over and had been decided in Samsung's favor.
South Koreans who take pride in Samsung's achievements suspect bias by the Silicon Valley jury, deliberating a few miles from Apple's Cupertino headquarters. But the ruling also reminds South Koreans of the more crucial factor at the moment -- that the national flagship company has yet to create an innovative product such as Walkman or iPhone.
"Copying and clever upgrading are no longer viable. Samsung must reinvent itself as a first mover, despite the huge risks involved in acting as a pioneer, if it hopes to beat the competition," Joong Ang Ilbo noted in an editorial.
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