Friday, April 5, 2013

Best Buy's Smart Move With Samsung

Today's financial press rightly makes a big deal out of Best Buy's move to open up 1,400 of its stores to Samsung's "Experience Stores."  The Korean giant will staff the stores with its own, dedicated cadre of product knowledge experts.  

Back when Best Buy was being left for dead within the analyst community, we made the following observation,
"Some analysts suggest vendors might not have an interest in Best Buy surviving.  Just like 1994, I can't understand what these folks are thinking.  Vendors need Best Buy.  Best Buy hasn't treated the vendors like partners and it hasn't demanded, or merited, the best from them.  This can be fixed."
So, again, I'd disagree with the Wall Street Journal's characterization today that "Samsung's move today throws a lifeline to Best Buy."  Unlike HTC and other companies, Samsung has emerged from Apple's powerful mobile wake as perhaps its only serious competitor.  However, making a retail presence for itself in the U.S., apart from the carriers and Amazon online, would be prohibitively expensive and likely to fail.

Samsung has always made nice, underrated mobile phones.  They work like Swiss watches, have user friendly design features especially in the user menus, and they utilize their batteries well.  Their designs haven't traditionally been candidates for MOMA design awards, but they were fine. I'm on my  second non-smartphone now, only because I lost the first one.  Now, they've sent Apple a wake up call, and they need to make a serious push.

Best Buy's move treats them like a partner, rather than a source of product, and it should expect the best of them in these stores, because it is Samsung's game to win or lose.

Check this out from Samsung's recent Annual Meeting of Shareholders:
"Firstly, Samsung Electronics will work to advance into a company that leads the global electronics industry. To this end, the company has drawn up plans to maintain its lead over competitors in key business areas, including the mobile phone, TV, and memory businesses, while strengthening basic competencies in promoted business areas, including the home appliance, printer, camera, and system LSI businesses. .../

Thirdly, Samsung Electronics will continue to make efforts to solidify its reputation among consumers and gain wider acceptance in society as a trusted and admired company. 

Moreover, Samsung Electronics will continue to advance the culture of mutually beneficial growth with its partner companies, in which knowledge and expertise is shared to enhance the global competitiveness of its partners. 
Don't think for a minute that the presence of  Hubert Joly as Best Buy CEO, an experienced global executive, didn't have a positive impact on this deal.  It should also help its success downstream and open up other opportunities for Best Buy to "Renew Blue."

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