Samsung Electronics, which has vaulted the value chain on the strength of its hardware, will go out and buy mobile content providers, a senior executive told Reuters, to compete with Apple, Google and Amazon.com in a global digital music market worth nearly $9 billion.
The South Korean electronics giant has muscled its way to global leadership in TVs, smartphones, chips and display screens - packing internally sourced state-of-the-art components into consumer gadgets - but software remains a weak link.
"The message we're getting from the top is to raise software capability, and buy rather than build, if needed," Kang Tae-jin, senior vice-president of Samsung's Media Solution Center, said in an interview. "Our focus on software is primarily aimed at driving hardware sales, rather than making money. We have a full range of handsets in so many countries, and, to better market our products, we thought it's better to start our own software business."
Apple's potential launch of an online streaming music service is prompting rivals to counter the iPod maker, which pioneered and still leads the digital music market. Success in today's mobile market means integrating products to seamlessly connect hardware and software.
In May, Samsung bought online music service mSpot and has built its own Music Hub service to compete against Android's Music Player, Apple's iTunes and Amazon's Cloud Player. Kang says Samsung is ready to do more deals.
The boardroom push, and Samsung's aim to grow Music Hub to among the world's top-four digital music services, has fuelled speculation that online streamers such as Pandora Media and privately-held Spotify could become takeover fodder. Big content firms and broadcasters are jostling in a digital music market set to grow nearly a fifth this year, led mainly by streaming services.
Kang declined comment on potential targets. "We want to grow the Music Hub to rank in the world's top four services within three years in both revenue and subscribers. And to shorten the time, we're ready to do more acquisitions," he said. "Mobile business is what Samsung is doing really well, and as a result we have deep pockets. We are very serious about content business, as we showed with the acquisition of mSpot."
