Eleven years ago, a year before Steve Jobs introduced the first iPhone, Samsung Electronics swept past then arch-rival Sony to become number one in liquid crystal display (LCD) TVs. At the time, the company was known more in the business world as an enterprise memory chip supplier, an underappreciated commodity both then and now. In the mass market, it was making its name known to consumers with its slider feature phones, challenging the hegemonies of Nokia and Motorola.
It was a symbolic and energizing moment for the South Korean tech giant. It spurred its growth and gave the company the confidence that is now integral to its DNA. Today, Samsung is the only rival to Apple in smartphones and its memory chip unit has grown to a massive cash generator.
In TVs it still holds the world's top position. Samsung LCD TVs, according to Statista, had a market share of 21.6 percent in 2016, near double that of LG Electronics' 11.9 percent. Samsung is also the largest vendor of smart TVs. Samsung's Visual Display (VD) business, the company's own TV unit, is proud of that achievement even today, despite being overshadowed by the higher margins of Samsung phones and semiconductors. But in contrast to Sony's 35-year reign in CRT TVs, arguably a lot more has happened in the past decade in technology and society.
Of course, there is the smartphone, which changed the way content is consumed content and shifted consumer expectations; the continuing evolution of flat-panel displays, with Samsung's move to QLED and the formation of the B2B Display unit; artificial intelligence (AI); big data and the cloud; and new services emerging from the "abundance of data" that are changing what devices can do when grouped together. For Samsung, global leadership brought with it new objectives and new anxieties.
Today, Samsung believes that with changing consumer expectations, crisper image-rendering displays, and new data-intensive services, we are at the dawn of a paradigm shift in the definition of a TV. The company's VD executives shared with ZDNet the challenges they face as the world's largest innovation vendor.
'OLED is a dead-end; QLED is the future'
Like the insatiable desire for faster connectivity and more storage, the desire for lifelike TV images will never change. Samsung's introduction of quantum dot (QD) LCD TVs in 2015 -- branded SUHD then but now QLED -- was a statement of where the future lay, said Changbae Park, senior manager at product strategy team of the VD business.
Just a few years ago, the South Korean tech giant was heavily promoting OLED (organic light-emitting diode), butting heads with compatriot LG Electronics. It seemed OLED would be the next fight between the Koreans in their half-century-long rivalry in TVs.
Until Samsung introduced QD LCD TVs, that is. Put simply, a QD film is layered on the LCD that enhances the colour accuracy and range. Samsung began researching the core technology of QD materials 10 years ago with display applications in mind. But while Sony gave up on QD LCD in 2013 due to the need to use cadmium, which is harmful to humans, Samsung managed to overcome this. (Sony also gave up on OLED in 2010 after being the first to introduce an OLED TV in 2007.)
"We concluded that OLED was a dead-end," said Park. "There were a lot of fundamental problems with OLED, such as the burn-in, especially for over 65-inch large size TVs, which is difficult to overcome, and a limited brightness that's inadequate for HDR (high dynamic range).
"The choice was neither easy nor difficult. It was just an inevitable, logical choice on our part, if you consider what the consumers would want," the senior manager said. "I can categorically say that we do not plan to shift back to OLED. As a leader, it is not a responsible choice. Not now or in the future."
OLED uses organic materials that fundamentally limit the display's lifespan and causes burn-in, Park said. "Ask any retailers about burn-ins, and they will know."
Conversely, QLED uses inorganic materials that are more stable, meaning it doesn't have this problem. "We believe, ultimately, that the so-called OLED camp will, in the end, move towards QLED, and follow our lead," Park added.
"Internally, we have a roadmap. I don't want to say when, but we are heading towards an even more sophisticated technology with self-light-emitting quantum-dot diode. It will most likely be faster than people think it will be." Backlight will be removed and the QD material will emit light on its own.
One of the key advantages that OLED does have over QLED is the black levels. Park admitted that OLED has better black than QLED in pitch-darkness, but do the majority of consumers really watch their TVs in the dark?
Samsung surveyed TV owners in five countries -- South Korea, the US, Germany, Mexico and Vietnam. It asked those who bought a TV within three months which of three statements best describes how they watch their most recently purchased TV: In a bright environment with lights on; in a dimly-lit environment with adjusted lighting; or in a dark environment with all lights turned off.
In South Korea, 46.8 percent said they watch in a bright environment, while 32 percent said they dim the lights, and 21.2 percent said they turn off the lights. In the US, this was 16.4 percent, 49.6 percent, and 34 percent, respectively. In Germany, it was 17.2 percent, 56.8 percent, and 26 percent; in Mexico it was 16.8 percent, 41.6 percent, and 41.6 percent; and in Vietnam, it was 46 percent, 46.8 percent, and 7.2 percent.
Overall, Samsung found that more than two-thirds of regular consumers globally watch with the lights on or dimmed, but never completely off.
Only when the lights are completely off does OLED's black standout, and therefore, the company argues, the advantage is really minimal. The US' IES (Illuminating Engineering Society) and Germany's DIN (German Institute of Standardization) recommend living-room lighting of between 50 to 100 lux. Korea Standards Association suggests 150 to 300 lux.
Park hit out at the current procedure for of TV testing, where new releases are tested in dark rooms, close to a theatre setting. "When the majority of consumers watch TV at bright settings, shouldn't the way experts measure TV change?" Park is among several figures in support of the need for this change, arguing that display measurement must be considered in use case environments.
Samsung is now keen to expand HDR availability. Earlier this year, it partnered with Amazon in HDR10, and is working with Hollywood to make it the de factor standard in film making.
"HDR is of keen interest in the display, broadcasting, content, and film industries," Park said. "Life-like picture quality is the key to maximizing the potential of HDR. You need wide colour gamut and colour volume. The bar for brightness and width of colour gamut will get higher and higher, and QLED [which Samsung claims to have brightness up to 2000 nit] is the only one that can deliver. QLED also reduces the light reflect to extremely low levels, thereby producing an optimized black fit for bright settings."
QLED TVs accounted for 6 percent of Samsung's total shipments in 2016, and in revenue accounted for 16 percent. This has near doubled this year -- accounting for 10 percent of Samsung's total shipment as of June and 23 percent of revenue. The total contribution for 2017 may decline overall but it will still be a strong growth from last year, Samsung believes.
"Our yield rate for quantum dot materials has increased drastically since 2015," Park added. "Like LED TVs before it, as we become more cost-effective and receive positive reception from consumers, QLED TVs will become a mass market product, eventually."
"We believe that QLED will be the future of TVs. The industry will follow," said Kim Hyun-suk, president of the VD business -- the top boss of TVs at Samsung. "By strengthening this momentum, we will stay committed to maintaining our status as the top global TV manufacturer."
Trial and error
Samsung first put the app store in its convergence TVs in 2010, and the following year, it renamed them smart TVs. "It worked for phones, so we thought, 'why can't there be a smart TV," said Sangsook Han, vice president of Service Business team under the VD unit. "In the beginning, we did think of it more in terms of a 'TV version' of the smartphone.
"We didn't think seriously enough that those who use TVs had different expectations to those who use a smartphone," the VP said. "It was a learning experience. Looking back, I think it was a worthwhile attempt. It didn't increase our profits, but it shows our commitment to try something new as the leader."
The initial reaction to smart TVs was tepid globally. It was deemed too gimmicky, with rudimentary features that didn't suit how consumers interacted with the TV. And the demand was relatively small compared to today.
"There was a demand from consumers to have internet or internet-streaming services on the TV," Han said. "People knew they wanted water. But the question is whether they want their water hot or cold, or in a bottle or a cup? So what [we found] is important is 'how'?"
So the experiment continued. Moving from basically putting smartphone features into TVs, the company made new services with TV hardware specifically in mind. It added Family Story, a photo app for sharing among family members. In 2012, it added cameras that allowed users to see their fitness moves on screen (since removed due to privacy issues). In 2013, Samsung launched HiTV, which allowed simple conversations with the TV -- "ahead of its time," Han said with a chuckle. These services didn't last long, however.
"What we realized is that consumers didn't really want something new, really," said Han. "And we realized that TV was a medium that you watched, not a medium you use. Like the phone, more passive than active. It seems obvious in hindsight, but there was demand for, say, 'we wish there was calendar' or this or that. We only realized that it didn't work after we applied it.
"Our core lessons were, first, not to forget the main function of the TV -- something that is watched. [Consumers] want media content, more than anything else. And second, you couldn't change the way consumers watch TV, which is more or less on the sofa, leaned back. Many found the features hard to use. And you can't call it smart TV when you are asking consumers to become smarter. You had to allow them to stay the way they are and facilitate their use and their demands. We wanted effortless engagement," she said.
At the same time though, the demand for internet services continued to rise. According to Samsung's surveys, in 2012, demand for internet services was ranked 10th out of all consumer demands. In 2014, it jumped to sixth and in 2016 it reached fourth. In 2017, the demand for internet services, primarily internet-streaming, is ranked between second or third. "The goal was to give consumers what they want. We cannot turn back from smart TVs now."
After the experiments of 2012 and 2013, Samsung pressed the reset button in 2014. After conducting research, the company found consumers judged a TV as smart based on the whole experience -- from when it is turned on to when it is turned off -- rather than individual services. So the focus was now on user experience, from start to finish. Services, meanwhile, were focused on media content. Simply put, the goal was -- and still is -- to become an easy-to-use content hub.
The company applied Tizen to all its TVs that year in preparation, and in the following year launched the One Remote and Smart Hub -- as well as a simplified UI that aggregates all content into an easy-to-view menu with previews. The goal was to make the smart TV experience smarter without taxing the consumer. Voice commands and smartphone control were also added to help consumers reach media content faster. Today, users can control their TVs via the Galaxy S8 or newly-launched Galaxy Note 8 through the Smart Hub app.
Previews are now decided by the content partners themselves, such as Netflix and Amazon. "So instead of making new services, we invited content vendors to use our smart TVs as their hub to deploy their content. We don't want to force our services on the consumer anymore," said the VP. "This kind of collaboration was unimaginable when we started. Apple's set-top box is available too now.
"Smart TV is an eco; what I mean is that it can only be done through collaboration and communication with departments," said Han. "Inside the company, the hardware, software, UX, UI, and service team, and other businesses besides VD [are] working together. Starting in 2014, we have extended this cooperation with our outside partners. Our fundamental attitude changed. And [since] 2016, the reception for our smart TVs has been very warm."
Samsung launched the TV Plus this year, which aggregates 4K and HDR content. "We have UHD resolution, and we have committed our partners on 4K (UHD) and HDR. We want to keep that promise and become their hub as well," Han added.
OTT content partners, film studios and gaming firms are reevaluating the TV as a content hub, said Han. "Facebook now has a TV app exclusively for us. This was unimaginable only a few years back. Content makers are seeing the value of the new smart TV and how it can help them reach a wider consumer base."
Internet of Screens: From picture frames to trucks
11 years as the top vendor drastically changed internal processes. As well as picture quality and smart convergence, design and form factor became more and more important.
"When we were the fast follower, it was easier," said Park of the Product Strategy team. "We saw everything logically. All we needed to worry about was the step-by-step evolution of picture quality. Now everything starts with imagination.
"What we do in Product Strategy is basically come up with a concept from scratch. We try to look beyond the conventions of TV. We look at new values that the TV can create in the consumers' lives. Therefore, we look at their lifestyle and we think a lot about design and form factor that will ultimately become a part of their lifestyle. It's not just about picture quality anymore. It's about the form and what the TV can do."
The South Korean tech giant's technological sophistication wasn't always taken for granted. The firm's Bordeaux TV, its 2006 hit that helped it surpass Sony, was more known for its crystal wine glass-inspired frame design. The design focus that started then has now moved on to form factor.
The first major tweak in form came with the Curved TV, featuring a curved screen for the first time in a flagship product. This year, the company launched the Frame TV, a picture frame-shaped TV that can be put on a stand or mounted on a wall.
"It's not just the form factor," said Han. "Our Frame TV has a picture store, where users can decorate their houses by using it as an art gallery, which is possible from our crisp picture quality and smart features."
The VD unit kicked off its B2B display business unit in 2015, and is now deploying QLED signage, such as screens that are used as mirrors in barbers. Samsung has also put screens at the back of trucks for the Safety Truck concept, allowing cars behind to see the view ahead. Huge LED screens are being installed on stadiums and movie theaters, while the flexible screen has been applied to prototypes, although yield rate is preventing commercialization.
"These projects are not about profit. It is about leadership. We have to imagine things, apply them, and see if they work."
"Samsung has been the leader of the TV industry for 11 consecutive years," added Park. "Part of it stems from our continued effort to discover new usage cases. Technology and innovation are very important. These projects are not gimmicks. They are our experiments. Many experiments fail. That is not the point. The point is that we continue to try and find what the consumers want."
So what is a TV?
It can be argued that, besides picture quality, the fundamental function of the TV has never changed from its inception up until the 1990s. From JFK's address during the Cuban Missile Crisis to OJ Simpson's trial, the TV was the king of the home -- where families gathered to learn the latest goings-on in the world.
Today, however, people have their smartphone for content consumption. Samsung seems to be moving away from the TV-centric Internet of Things strategy to one more balanced between devices, with TVs, home appliances, and smartphones considered equally. To illustrate this, the conglomerate announced it will apply more AI and voice recognition features to home appliances, seemingly to compartmentalize "command points" in the home. So where is the TV headed in the next five years?
"The TV today is not the TV of old. In the CRT age, people watched three to four hours of it, and it was off," said Han. "Do consumers really buy one TV today? TV comes in so many different sizes now, from 20 inches to 70 inches. Do people enjoy the same family time of old? Are the houses we live in the same? Do people use TVs the way did before? These are all questions to consider when you look at the fast-changing market.
"What we think about is the role of the TV in those remaining 20 hours, besides the four-hour average when it is being watched. We imagine it to be a screen that gives new functions. It won't just be in the living room. It will be in places we haven't thought of ... as windows, picture frames, and music players. And outside the home.
"In five years, we think TVs won't be called TVs. They will be a smart device. Don't get me wrong, there will always be demand for the best picture viewed on a large screen. That interest won't fade. But today, near 60 percent of all TVs are smart TVs. Monitors and tablets do what TVs do. There is a convergence unlike anything we've seen before," she said.
"The point is that any service, technology, or platform we have will in the end serve our greater purpose of giving consumers a better experience."
She declined to comment on whether Bixby was coming to TVs next year. However, Injong Rhee, Samsung mobile CTO, has said that the firm's Bixby AI platform will be coming to devices outside of smartphones. Samsung Mobile boss DJ Koh said the firm will introduce a Bixby service that connects the Note 8 with TVs in China, though he didn't provide details.
The way departments communicate has also changed, Han added, both pro-actively and in reaction to changes. Frame TVs, for instance, sport a sensor made by the semiconductor business.
"Inter-business communication has improved remarkably. We are following consumer demand for convergence," Han said. "The VD unit no longer thinks in terms of 'we have to sell TVs', but more in terms of 'how this helps the combined experience of the consumer'."
Samsung is near obsessive about consumer feedback. In the first half of this year, VD conducted over 80 consumer survey projects in North America, Europe, the Middle East, CIS nations, Southeast Asia, South Korea, China, and India. These surveyed consumer living and viewing environments, spatial roles, and how people watch TV depending on where they are in the house. The firm also does a lot of focus group interviews and home visits.
"We try to find unmet consumer needs and pain-points, and these are our concept seeds that we develop into a prototype. These prototypes are lent to consumers for us to review and make assessments of what makes the most sense in their lives."
Then there is the conglomerate's long experience in supply chain management (SCM). Samsung's system for managing inventory makes it well-known in South Korea as a "well-oiled machine". It has a strict protocol for checking healthiness of remaining stocks, and TVs are delivered by a total of 13 transportation methods.
"Consumer behavior is changing rapidly, so I can't say our TVs will always be a content hub. Those trial services in the early days of smart TV might come back, but in an evolved way that reflects the changes," said Han.
"We have been leading the TV industry for 11 years and will continue to be at the forefront of bringing about meaningful changes.
"For 2018, one of our keywords will be personalization," she added. "We are also planning a big announcement, which will be a result of collaboration among the businesses. TV is no longer king. A paradigm shift is imminent, and there will be an important role that the TV plays."