Image courtesy of Boy Genius Report
Samsung Mobile’s chief technology office Omar Khan is leaving the company for greener pastures, it was revealed yesterday. Khan is leaving for Citi where he will be responsible for their mobile initiatives. The unexpected departure arrives at a time when Samsung is chasing Nokia to become the world’s leading phone vendor and fighting Apple’s copycat accusations of stealing the design of iPhone’s hardware, software, packaging and even marketing communications.
As it turns out, Samsung may have already lost orders from Apple, its biggest buyer, as a result of the growing rift. The Globe and Mail reports that Apple might end its relationship with Samsung by taking their five billion dollar a year in electronics parts orders elsewhere. For example, Apple could order NAND flash from Toshiba, Micron and Hynix Semiconductor and mobile processors from Intel and TSMC. Samsung also supplies Apple with LCDs for computers and iPads. Samsung’s financial filings provide clues to its relationship with Appel.
For example, Samsung recently had to consolidate operations by merging component and manufacturing businesses in order to hide losses of the flat panel business among the lucrative semiconductor operations. This indicates Apple may have stopped buying LCDs from Samsung. They also issued weak second-quarter earnings, with profits dropping 26 percent to 3.7 trillion won (about $3.5 billion) due to sluggish television and semiconductor operations, signalling that Apple might have as well stopped ordering A5 and A6 processors from Samsung. The lower-than-expected guidance prompted analyst Kim Sung In with Kiwoom Securities Co. to slam the company hard over the misstep, arguing:
Only the phone business is holding up. Everything else is looking bad. There’s no bright picture for the company looking ahead.
So, if the loss of Apple’s business doesn’t derail Samsung, any slump in phone sales at this point will. So far phone sales are holding up pretty well…
IDC pegged Samsung’s first-quarter smartphone shipments at 10.8 million units, enough to rank the company the world’s fourth-largest smartphone vendor by units, following Nokia, Apple and Research In Motion. However, they’re #2 in terms of all handset units shipped globally, thanks to their own operating system Bada which powers feature phones. But Apple is expected to penetrate that low-end of the market with an affordable iPhone this Fall catering to feature phone owners who are upgrading to their first smartphone. Samsung outsells the iPhone in eight key markets now, a Kantar Woldpanel ComTech survey estimates, with a significant chunk of new sales coming from feature phone owners. The research firm expects that by the summer of next year nearly half of all handsets sold will be smartphones.
And about that Omar Khan departure. High-level hires are a fact of life, but it’s interesting that the executive left barely a month after Samsung hired a new chief marketing officer, Todd Pendleton, to oversee all marketing activities for Samsung’s mobile division in the US. This included “defining and leading integrated marketing, customer relationship management and customer experience management to create marketing strategies that align with Samsung Mobile’s corporate business strategy”, which is basically what Khan had been doing. It is therefore possible that Khan didn’t like his new role of chief technology and product officer or the new marketing chief might have marginalized him.
Regardless of the reasons, Khan was an asset to Samsung and his departure is clearly a loss for the Korean consumer electronics conglomerate. According to The Droid Guy, Khan “was at the forefront of Samsung Mobile’s entire move into Android from the Behold II to the Samsung Galaxy SII and everything in between and on the way”. Another possible link: Citi, Khan’s new employer, is a launch partner of Google’s Wallet initiative. Did Citi charge him with furthering that project? Only time will tell…
Cross-posted on 9to5Mac.com
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