Beijing time on April 5 evening news, Samsung released the latest data show that last year's marketing spending reached a record 13 trillion won (about 11.6 billion U.S. dollars), 1.3 billion dollars more than R & D spending. This is the first time that Samsung's annual marketing expenditure exceeds its R & D expenditure in at least three years.
Huge marketing budget
Samsung warned on Friday that it would not make a record profit in the first quarter of this year, the first time since 2011. Samsung has invested a huge marketing budget in recent new mobile phones, including the galaxy S4, in an attempt to attract loyal iPhone and iPad users to switch to Samsung products.
Galaxy S4 was released in New York last month. The phone uses the latest motion sensing technology to play / pause videos based on whether the user is watching the screen, or switch songs and photos based on the user's wave. However, industry insiders believe that this mobile phone will not subvert the smartphone industry.
Rachel lashford, an analyst at canalys, a market research firm, said: 'Samsung is lagging behind in creating new product types. Apple has created a new type of tablet. We are waiting to see if Samsung can achieve similar results. '
In 2012, Samsung's marketing spending exceeded its R & D spending. The company did not forecast future marketing and R & D spending. Some analysts expect Samsung to continue to spend more on marketing than on R & D this year in response to Apple's upcoming new products.
Lack of innovation
At present, the major manufacturers only improve the smartphone on the existing basis, such as increasing the screen size. Every new smartphone released recently has not caused a stir. The lack of amazing elements in these new products has also led to a decline in the share prices of related companies.
Apple's share price has fallen nearly 40% since it hit an all-time high of more than $700 in September last year. Samsung's share price hit an all-time high in early January, but has fallen nearly 3% since then. Due to the lack of long-term product line reserves, the stock price rising potential of these companies has been restrained.
Mark Newman, an analyst at Stanford Bernstein in Hong Kong, said: 'Samsung's product development in the coming year is not very clear, but we expect Samsung to release Galaxy note 3 later this year. 'in 2012, the cross-border products between smart phones and tablets have achieved amazing results. Sales show that many users prefer larger screen sizes to better view content.
Samsung estimates operating profit for the quarter from January to March will grow 53% year-on-year to $7.7bn. The popularity of mid-range mobile phones and sales in emerging markets have helped Samsung withstand the adverse effects of seasonal factors. However, it also means that Samsung's record of five consecutive quarters of record profits will come to an end.
R & D expenditure surpasses apple
A Samsung spokesman said on Friday: 'we will continue to increase our R & D spending and flexibly adjust our marketing according to market conditions. '
In the year to September 2012, Apple's R & D spending rose to $3.38 billion, up from $712 million in 2006. However, this R & D expenditure is still far lower than that of Samsung. Lee do hoon, RBS analyst, said: 'Samsung continues to invest in R & D and has expanded its smartphone R & D team from less than 20000 to about 25000. I think that they have an exciting product line and will launch it in the second half of the year, which will turn the market upside down. '
As early as the 1970s, Samsung used to reverse engineer Sony's TV sets to imitate Sony's products. Now Samsung is very different from that time. In 2006, Samsung replaced Sony as the world's number one TV manufacturer. This is largely due to Samsung's slim design and ultra-thin display.
However, the mobile business still contributed 70% of Samsung's revenue. Lee do Hoon said: 'Galaxy note 3 is expected to be released in the fourth quarter, which will be a very innovative product. The phone may be equipped with a curved display that increases the screen size without increasing the size of the phone. I think it's going to be very cool. '