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News
Samsung Hurt its Own MP3 Player Division With Apple Deal
Monday, October 3rd, 2005 at 3:00 PM - by Brad Cook
Samsung Electronics may have scored a major win with its agreement to sell a large chunk of its flash memory output to Apple for use in the iPod nano, but that deal "is expected to boomerang on [the company] in a bitter sales loss by the digital media division's MP3 players," according to an article at The Korea Times.
"Earlier this year," noted reporter Kim Sung-jin, "the company announced its bold vision to beef up its MP3 player business." Unfortunately, this isn't the first time one of Samsung's divisions has made a move that hurt another one: Mr. Sung-jin said that "the electronics stalwart has also waged a power struggle against its sister company Samsung SDI, the world's biggest plasma display panel (PDP) module maker, over the rights to develop and commercialize the next-generation display organic light emitting diode (OLED)."
Mr. Sung-jin pointed out that Samsung's business divisions operate under a profit-related-bonus system, which could be the cause of such self-destructive behavior. Another possibility is that "the overheated competition is a result of Samsung Group's decision to single out the most profitable business operations and discard less profitable ones aimed at re-streamlining its business portfolio through the 'survival of the fittest' scheme."
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