Date: 2014-05-11
SEC's decreasing market share
SEC has been good to consumers in a sense that the company tends to keep lowering the product prices while keeping the low margin and improving the quality over the long run. This is a norm in Tech business. This was true in its semiconductor business. Of course, the ultimate goal of its strategy has never been the enhancement of the consumer surplus; it is the profit maximization of the SEC. The strategy has worked in the SEC's favor and it is sustainable because the consumers benefit and the SEC enjoys the stable/increasing/dominant market share and a steady cash flow.
SEC's market share for mobile in key markets are declining, and the competitors thrived in recent years. While some are misguided, this is not a sign that the SEC's original strategy that worked perfectly fine for its semiconductor business proved not to be viable for the mobile. SEC has not stayed competitive enough in terms of its mobile phone pricing, while the margin could have been lower. Maybe this was due to the management's decision to be more 'agile,' with fear that the smartphone boom would not last that long. Maybe the management's greed for profit made them myopic. Or, maybe it was due to the peer pressure: (unfair) attack on its relatively low margin vis-a-vis Apple's. Strong Won did not help. As a result, the SEC has failed to lead the commoditization of the mobile devices. And because SEC failed to lead the commoditization, its market share could only decline.
SEC is still best positioned in the mobile devices scene, mostly thanks to the vertical integration. If well executed, it could gain its global market share back from Xiaomi, Huawei, and Apple, but the mobile device segment's focus seems to have shifted from scale to efficiency. But I am afraid that there is a limit to efficiency without help of scale in the business SEC is in. Also, the current strategy worsens the competition by giving the competitors a room to breathe.
This is an interesting development.