Design

Global expansion
driven by superior
product designs
1

Design has become a crucial component in driving

the business performance of consumer electronics.
The importance of design at Samsung Electronics
is growing and we operate 7 design centers:
the Corporate Design Center in Seoul along with
centers in London, Los Angeles, San Francisco,
Shanghai, Tokyo and Milan. The experts at each 2

location analyze local culture, lifestyles and industry

trends, and their input is strategically important
for the Corporate Design Center, which conducts
global research projects in cooperation with
the six other design centers, enabling us to build
what people around the world want into our
product functions and designs.

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 Leadership in user-centric designs appealing to the senses
The Samsung corporate philosophy now stresses that true innovation
1. K5 MP3 Player 4. Graphic User Interface for Mobile Phone starts with an accurate understanding of user needs. We have gotten
The K5 is easy for anyone to use. This screen garnered a 2006 iF
away from the age-old emphasis on what manufacturers or sellers
The MP3 player and a speaker form Communication Design Award in the
a single unit, while we have created a Interface category for its user-friendliness want and is now focusing on user-centric designs.
unique “slide and tilt” structure to add and intuitive display of the mobile phone
functions. In addition, we have won design
The User Interface (UI) Laboratory has been established to
a new dimension to the MP3 player
experience. awards for PC screen savers, home discover ways to provide users with new and intuitive experiences.
gateway interfaces, audio-video network
2. SGH-U600 Mobile Phone
solutions, and exhibit promotion sites.
The laboratory enables us to stay a step ahead of the changes in the
The design concept for this ultra-slim, UI environment made possible by technology advancements. Our
semi-automatic slider emphasizes 5. Touch Messenger Braille Mobile Phone
the “minimal modern” with sleek soft This concept design created by designers UI designers develop physical, auditory and graphic user interfaces,
lines. The motif is inspired by the from Samsung Design China
(in Shanghai) won an IDEA Gold Award,
which are then used to clearly distinguish Samsung products in the
smoothly connected joints of
a bamboo stalk. Our engineers have one of the world’s most prestigious honors, era of digital convergence.
used magnesium to craft a phone in 2006. Touch Messenger enables
the visually impaired users to send and
We approach design as a means of providing product users
that is thin, light and sturdy.
receive Braille text messages. with pleasing experiences of the senses. Importantly, improvements to
3. SynchMaster 971P Monitor The 3×4 button layout on the mobile phone
The triple-hinge stand allows the user is used as two Braille keypads, while text
product color, materials and finishing add a premium feel.
to adjust the screen angle freely, while messages and the phone operating status
the overall shape is simple and intuitive. can be checked through the Braille display
The stand can be folded to minimize screen beneath the keypad.
Design excellence presented by numerous awards
the package size and facilitate logistics. Our outstanding design capabilities are confirmed by the industry’s
6. Bordeaux Plus LCD TV
More than a display, the Bordeaux Plus prestigious design awards. We won 80 awards in 2006 alone, firmly
32˝ LCD TV is a work of art that will enhance
any interior. Subtle lines project a feeling
establishing the Samsung brand in the hearts of design enthusiasts all
of clear and transparent sound. The use of over the world. The Industrial Designers Society of America honored
lacquer on the exterior harmonizes
the black and opaque materials.
three Samsung products with its Industrial Design Excellence Award
(IDEA) in 2006, again making us the most frequent IDEA winner during
the past five years. We also won 24 iF Product Design Awards from
International Forum Design Hanover during the year, and seven iF
Communication Design Awards for software.
In Asia we received 24 prizes at Japan’s Good Design Awards,
including the first Gold Prize for a Korean company as well as a
Special Prize. Samsung also won the Design for Asia Grand Prize,
in recognition for outstanding contributions to lifestyle improvement
in the region.

Standout programs for cultivating design expertise

We offer a broad range of design-related training in order to improve
design competitiveness. The Samsung Design Membership program
was established in 1993 to cultivate designer talent in Korea.
In 2006, the program was expanded globally, enabling select
design students from around the world to share their ideas, work
5 together on projects and grow as professionals. The program’s
contributions to designer development and creativity were recognized
with a Special Prize of the Chairman of the Jury at the 2006 Good
Design Awards in Japan.
The Samsung Art & Design Institute (SADI), established in 1995,
is changing the design education paradigm with one of the world’s
most advanced curricula and an emphasis on practical applications.
The design philosophy at Samsung Electronics stresses that design
and other such creative strengths are now at the heart of corporate
competitiveness. SADI classes are reserved for a limited group of top
designer talent, and graduates work in many areas inside and outside
Samsung.

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Marketing

Creating
a premium brand
Samsung Electronics has entered new territory
as a premium brand, outshining many of the biggest
names in the business.

Brand Value (in billions of USD)

04 12.55 (21th )
05 14.95 (20th )
06 16.16 (20 th)

(source: Businessweek / Interbrand)

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 Global brand campaign
The core value of Samsung Electronics involves benefitting people’s
lives through emotional and innovative technologies and design. We
are getting this message out via multifaceted advertising campaigns
in 60 countries that encompasses the four main media as well as the
internet. The campaign presents lifestyle stories in which mainstay
Samsung products play the hero. The goal is to emphasize the
emotional aspects of the products and the brand.

Endeavors to become a premium brand

Customers’ purchase decisions are increasingly swayed by emotional
factors in addition to product features. People who buy premium
products express their own style through the products and brands
they own. In other words, they identify with the product image. We see
our core value in expanding possibilities in customers’ lives by applying
emotional, innovative technologies and designs with the understanding
of the changes in and needs of these customers as a basis.
Our unique core values and messages are conveyed through
various brand marketing activities. An emotional link is strengthened
between Samsung and the customers, ultimately elevating the
premium image and customers’ preference for the Samsung name.

Improved corporate image from corporate advertising

Stressing corporate social responsibilities has emerged as a key factor
in the advertising activities of global companies. We stress social
contributions as part of the overall business plan. Unlike most other
marketing advertisements, the corporate advertisements are aimed
mainly at the opinion leaders.
We are moving away from advertisements that focus solely on
products. Instead, we express our philosophy and commitment toward
social contributions and public benefits. A consensus is created with
the audience and greater public trust in the company is fostered.

Staying close to the customers

Our marketing activities reach customers through sports, culture,
experiential marketing and various other approaches. This enables
the customers to experience the company closer up. We sponsor
various sports teams and events in each major region of the world and
conduct sports marketing programs that target local audiences.

Sharing the hard work and excitement of sports

Sports have the power to bring people together, transcending ethnic,
Samsung Experience in New York gender, religious and regional differences. The sportsmanship spirit
helps to bring peace and happiness to the world, which is in line with
the Samsung corporate philosophy that stresses social contributions.
Our involvement in sports goes beyond financial support. We
supply our state-of-the-art technology to help ensure that major
sporting events are conducted most successfully. Samsung sponsors
the Olympics, Asian Games and other international events, and also
supports regional events as a way to stay close to the local population,
thereby raising the brand image and exhibiting excellent corporate
citizenship.
Our first involvement with the Olympics was as a local sponsor
for the 1988 Seoul Summer Games. Realizing the vast potential of
Olympic marketing, we have maintained the Worldwide Partner in
the Wireless Communications category for the 1998 Nagano Winter

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Games, 2000 Sydney Summer Games, 2002 Salt Lake City Winter
Games, 2004 Athens Summer Games, and 2006 Turin Winter Games.
Samsung will also sponsor the 2008 Beijing Summer Games.
We bolstered our brand recognition in Italy by being the Presenting
Partner for the torch relay in advance of the 20th Winter Olympics, held in
Turin in February 2006. A “Samsung Caravan” traversed the entire country
during the relay, and the Olympic Rendezvous at Samsung (OR@S) was
run as a showroom and central point for our diverse on-site programs
during the Games. Both athletes and fans became much more familiar
with Samsung through OR@S.
We were also the Prestige Partner in three categories (Audio/Video
Products, Appliances, and Wireless Communications Equipment) for
the 15th Asian Games, held in Doha in 2006. We supplied more than 8,000
products around Doha during the Games. Visitors to the Samsung Digital
Gallery could try out many of our top-of-the line products such as full-HD
LCD TVs, Quatro refrigerators and Ultra Edition mobile phones. In addition,
the Samsung Lounge offered free internet access and phone calls to
journalists from around the world who were covering the Games.
Since 2005, Samsung became the new Official Club Sponsor of
the Chelsea Football Club, gaining greater exposure with football fans.
In 2007, we are the title sponsor of the 26th annual Samsung World
Championship, one of the major events on the LPGA tour.
Other noteworthy sports events and organizations include the
Samsung Super League equestrian championship, World Taekwondo
Federation and the International Hockey Federation.Each year, we serve
as the Worldwide Sponsor of the World Cyber Games (WCG), the world’s
largest online gaming sport tournament. In 2006, the Grand Final of the
1
Samsung WCG was held at the Formula One racetrack in Monza, Italy.
More than 10,000 people came to watch over 700 top gamers from
70 countries battle it out. The number of journalists covering the event
exceeded 400, and the excitement and competitive spirit were relayed
to fans worldwide via TV and the internet, with Webcasts run in English,
Italian and Chinese.

Culture marketing with a special emotional appeal

The Montreal International Jazz Festival (in French, Festival International
de Jazz de Montréal), the largest jazz festival in the world, was sponsored
by Samsung for the second straight year in 2006. More than 20,000
jazz fans came to listen to performances by some 2,300 artists from 30
countries. Customers worldwide were enthralled by our online promotion
2
in conjunction with the Jazz Festival.
In Russia, meanwhile, Samsung is the Official Sponsor of the State 1. Turin Winter Olympics Sponsorship (Torch Relay)
Hermitage Museum, one of the world’s three largest, as well as the State Samsung Electronics was a Worldwide Sponsor of the Turin Winter Olympics as well
as the Presenting Partner for the torch relay in advance of the Games. We were given
Academic Bolshoi Theater. the right to choose a significant number of the torchbearers from around the world to
carry the torch throughout Italy.

Experiencing Samsung products first-hand 2. Turin Winter Olympics Sponsorship (OR@S)

The Olympic Rendezvous at Samsung (OR@S) entertainment and relaxation lounge
Brand shops and showrooms add another dimension to our marketing was located at the Piazza Solferino in Turin. Visitors could inspect the company’s
activities, allowing customers to experience our premium models for latest high-tech marvels and enjoy various fun-filled events.

themselves before making their purchase decision. These facilities are 3. Sponsorship of Chelsea Football Club (2006 team)
We were selected for the Best Sponsorship of a Sport Team or Individual,
strategically located in major cities around the world. the most prestigious sport industry award in Europe. This honor is testimony to
The highly successful Samsung Experience in New York City’s the effectiveness of our global marketing activities.

Times Warner Center is a digital technology landmark that has attracted

one million visitors in just two years after its 2004 opening. Thirty-one
percent of the visitors purchased a Samsung TV within a year of their visit
to the Samsung Experience. In 2006, the showroom is estimated to have
generated around US$55 million in sales.

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 The success of the Samsung Experience has drawn the attention of
both journalists and academics, who see the showroom as a case
study in experiential marketing. The New York Times has carried
numerous articles describing in detail the place where New Yorkers can
go to see and play with the latest digital technology and products from
Samsung. Columbia University now offers an Experiential Marketing
course for corporate executives and brand managers, and a visit to the
Samsung Experience in New York is one of the course requirements.
The Gallery Samsung in Moscow was renovated in 2006, and
the new facilities include a showroom, conference room, and business
lounge. In 2006, around 200,000 Russians come here to try out
some of the most famous premium items. The aggregate number of
visitors has reached more than half a million, making this the foremost
showroom in Russia.
In the future, we will strengthen our ties with art, education
3
and tourist organizations to further develop the reputation of our
showrooms and brand shops around the world.

The Samsung brand at airports, gateways to world travel

Airports continue to grow in importance as marketing venues. In 2006,
we installed 1,300 large-screen monitors at London’s New Heathrow
Airport, which serves more passengers a year than any other airport
in the world. We believe targeting Heathrow is a very effective way to
elevate brand awareness, considering that London is scheduled to
host the Olympics in 2012.
The international airports at Dallas, Santiago, Hong Kong,
Lagos, and Incheon are already equipped with Samsung LCD or
plasma screens, while Schiphol (Amsterdam) as well as Mexico City
International will soon be added to the list. Gigantic cellular phone
displays have been erected at more than twenty international airports,
5
including Charles de Gaulle International (Paris) and Sheremetyevo
Airport (Moscow), and additional displays will be installed in Cairo,
Istanbul and Toronto.
In December 2006, we marked our 10th year of cellular phone
sales in the US by setting up fifty Samsung Mobile Stations inside JFK
International in New York. Travelers were able to recharge their mobile
phones, laptop PCs and other digital products free of charge at these
stations. We are planning more diverse marketing activities at airports
in the future to foster public trust and brand recognition.

A company that cares for local communities

4 6
Our cause marketing effort includes donations to and fundraising for
4. Doha Asian Games Sponsorship
foundations and other organizations. In this way, we fulfill our corporate
(Qatar National Olympic Committee Building) social responsibilities, thereby enhancing customer value and pride
During the Doha Asian Games, we promoted the Samsung brand by displaying
large advertisements at airports as well as on vehicles and billboards throughout
while helping to improve local communities. We established the “Four
the Middle East. The massive wrap advertisement all across the face of the Seasons of Hope” program, “Hope for Education” essay contest and
Qatar National Olympic Committee Building caught the interest of many people,
and during the games, the structure was nicknamed the “Samsung Electronics various other events. Even more ambitious projects and expanded
Building.” community service activities are planned to do more for those who are
5. Samsung Mobile Stations in need around the world.
We set up stations at JFK International for travelers to recharge their handheld
digital products free of charge. The response was even better than expected,
which indicates the need for such services. Consequently, similar stations have
been installed in the international airports in Los Angeles, Atlanta and Dallas.

6. Gallery Samsung in Moscow

Our large-scale showroom gives Russians a chance to experience digital products
first-hand. We have also sponsored the Bolshoi Theater and Hermitage Museum
as part of a marketing approach that positions Samsung as a culture-friendly
brand.

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Research and Development

Leadership through
a continuous
commitment to
R&D
Certain competencies are important for becoming
the world leader. First, a company must have the
creative people who can develop the appropriate
technologies. Second, cooperation is needed
among business partners throughout the entire
supply chain. Finally, new markets have to be
pioneered continuously.
Speed is essential for remaining competitive in
today’s digital era, as new technologies are being
constantly introduced to the market. We strive
to understand what customers need ahead of
competitors. Our engineers adjust their thinking to
develop original and innovative products that will
meet those needs as well as new technologies to
lead the future market.

R&D Investment (in trillions of KRW)

05 5.5
06 5.6
07 6.1(estimated)

Number of Patents Registered in US

04 1,609 (6th )
05 1,641 (5th )
06 2,453 (2 nd )

(source: USPTO)

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 People and technology, the wellspring of Samsung’s core competitiveness
In 2006, the Financial Times ranked Samsung Electronics 9th in R&D investment among
1,250 companies around the world. Only such industry giants as Ford Motor Company, Pfizer
Pharmaceutical and Microsoft are now spending more on research. This newspaper reported
that over the past four years, Samsung’s massive investment in R&D has had a great impact on
the electronics industry, prompting competitors to spend more on R&D.
We invested 9.42% of parent company revenues, or KRW5.58 trillion, on R&D in 2006.
The plan in 2007 has been set at KRW6.14 trillion to cover all business lines, including
semiconductors and LCDs. We are also working on innovative and unique printers and other
products that can be as successful as the Bordeaux LCD TV was in 2006.

A quarter of the entire workforce in R&D

Our greatest asset is the solid pool of talented people who can develop value-added,
market-leading products that bring new value to customers. Thirty-six thousand people,
26% of our entire workforce, are involved in creating and developing tomorrow’s products.
These researchers and engineers work at 42 research facilities around the world and they
are trained continuously in order to lead the company into the future. The various research
facilities are closely linked to develop strategic technologies for the future as well as original
technologies to establish new market trends.
The R&D personnel at Samsung Electronics are increasing by about 20% a year and will
number 52,000, or 32% of all employees, in 2010. They will provide us with the capability to
lead the digital convergence revolution in the fast-changing IT market.

For a systematic R&D structure

The Samsung R&D organization is systematically structured in three layers. The development
teams within each business unit are responsible for commercializing products scheduled to hit
the market within one or two years. The R&D centers of each business focus on technology
that is expected to bring results in three to five years. Finally, core technologies for new
business areas are developed under the Corporate Technology Office (CTO).
The CTO undergoes improvement constantly to strengthen our technology leadership.
Recently, the Software Research Center, Production Technology Research Center, CTO
Strategy Office and Digital Solution Center were all reinforced to enable us to pioneer new
business areas from a company-wide perspective. The New Business Team was also
reorganized as a separate entity that can uncover new technologies that are beneficial for every
business of Samsung Electronics.

One of the world’s most prolific patent creators

Our aggregate patent portfolio totaled around 9,000 in 2002, but the number of new patents
has skyrocketed since then. We registered 17,377 patents worldwide in 2006 alone, and our
2,400-plus patents in the US were the second most of any company.
The patents are not solely related to current business lines. We are taking aim at fusion
technology and have begun research in biotechnology and other future-oriented fields.
Applications for biotech patents totaled 208 between 2004 and 2006, higher than any other
Korean company. Many of these patents are related to biochips and other fusions of information
technology and biotechnology.
The importance of patents is now greater than ever. Since IT products and technologies
change so quickly, patent sharing among companies is widespread. Firms specializing in
patents have emerged. Patent disputes are becoming more complex, requiring comprehensive
and constant countermeasures. To answer this trend, we have newly created the Chief Patent
Officer position and augmented our team of patent specialists.

Creative product development capabilities

Patent registration alone is not enough for us; our technology and products are proof of
Samsung Suwon Complex in Korea
our industry leading prowess. Some of the most important Samsung developments for 2006
include charge trap flash architecture for next-generation NAND flash memory, the Bordeaux
LCD TV series and the Mobile WiMAX technology. More major breakthroughs such as these
are expected in 2007.

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