Monday, August 10, 2015

Samsung IoT Strategy & Patent Exploitation

I. Samsung IoT Business Strategy

Recently, several S. Korea’s news media expressed their concerns regarding the future of Samsung IoT business. The concerns are based on KT (Korea Telecom)’s recent research report “Smart Home Trends & Implications.” The report doubted Samsung’s capability to drive successful Smart Home business, which is the key IoT (Internet of Things) business of Samsung. The report reasoned that, because Samsung has never been successful in the platform business, Samsung may lack in execution capability to become the winner in the IoT platform wars, and thus, in the emerging IoT market. Rather, the report expected that Apple and Google will lead the future Smart Home market because of their core confidence in platform based SW/IT integration.

In response to the concerns, Asiatoday, a S. Korean newspaper, expressed a different view about the Samsung’s future of IoT business.  Quoting personal discussion with Samsung executives, Asiatoday said that Samsung has never derived the IoT as a main business up to now because the lack of business reality of the IoT market. Rather, Samsung is at the stage of preparing IoT business by focusing on R&D and business ecosystem development. Asiatoday also mentioned that the “Fast Follower Strategy” that Samsung has several success track records will also work in the emerging IoT/Smart Home market because of its HW integration capability across chips, devices, networks and appliances, which are the key business resources for offering new values to customers.

Actually, Samsung has just started to derive the IoT business by providing the open IoT platforms and intensifying relationship with the IoT business ecosystem collaborators. Samsung released the IoT platform “Artic,” an open platform comprised of hardware modules, software, networking and cloud services, in May.  Samsung also recently introduced a Web based platform, IoT.js, to provide interoperable service platform. SmartThings, acquired by Samsung last year, announced the SmartThings Open Cloud, a cloud service. Samsung is fostering its collaboration relationship with innovative IoT start-ups through the Samsung Strategy and Innovation Center in Silicon Valley.

In addition to the efforts to have a leadership in the IoT business ecosystem, Samsung also need to make efforts to form the IoT customer ecosystem. The “First Mover” advantage and the business ecosystem integration capabilities are not the only key success factors that made Apple as the winner in the smartphone market. Keep innovating to offer values to customers and always satisfy customers’ expectations, and thus, to form the Apple fan club and enthusiasts, is the most important success factor. Therefore, to become the winner in the emerging IoT market, Samsung also need to do its best to offer new values to customers and form the Samsung customer communities for customers’ satisfaction and meeting the expectations by orchestrating its IoT business architecture. Following figure illustrates Samsung’s IoT business architecture to orchestrate.

II. Patent Exploitation for Samsung IoT Business Strategy

Samsung is the 2nd largest patent holder in the US (4,952 issued patents in 2014) and the 1st largest patent holder in Europe (2,541 issued patents in 2014). Thus, patents can be a very important business resource to exploit for developing the Samsung IoT business leadership. For example, Samsung patents can be exploited for the development of the disruptive IoT products/services by opening patents to the business ecosystem collaborators in diverse industries (the “Open IP Innovation”). By letting the collaborators develop the disruptive IoT products/services exploiting Samsung patents, Samsung can keep focusing on the current mainstream market in addition to effectively prepare the emerging IoT market created by the disruptive IoT innovation.

Recently, Samsung opened its 38,000 patents in various fields including telecommunication, semiconductor and display to S. Korean SMEs and venture companies as the part of the creative economy innovation center project. Total of 3,000 patents will be provided for free. Samsung will send its patent experts to the center to help exploiting its patents by the selected members of the center. Samsung will need to extend the Open IP Innovation program to its global IoT ecosystem collaborators for developing the disruptive IoT products/services.

A smart and practical method to exploit patents for the development of the disruptive IoT products/services through the Open IP Innovation is to apply the new product/service development methodology in the “Blue Ocean Strategy” (the “Blue Ocean Patent Strategy”). The basic principle in the Blue Ocean Patent Strategy is to exploit patents to achieve the value innovation by using the patented technologies to create new values, and thus, to provide new products/services. The exploitation of existing patented technologies not only allows the low cost IoT product/service development but also provides the protection against competitors’ infringement.

For details regarding the IoT business ecosystem, business models, platforms, disruptive innovation and related patent strategy, please consult the following articles.

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