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(News Focus) (IFA 2010) Samsung largely quits e-book biz, bets on tablet PCs
By Lee Youkyung
SEOUL/BERLIN, Sept. 8 (Yonhap) -- As Samsung Electronics Co. ventures into a new device business with the rollout of its first tablet PC, the company is making a fresh bet about the future of reading that sets it apart from companies like Sony Corp. and Inc.

   Samsung, the world's largest technology company by sales, believes that the emerging tablet PC will eventually drive electronic book (e-book) readers from the market and become a dominant platform for reading.

   "The digital book market will be replaced by tablet PCs," Choi Gee-sung, the chief executive officer of South Korea's most valuable company, said in a meeting with reporters in Berlin.

   The remarks were made a day after the company unveiled the Galaxy Tab on the eve of the 2010 IFA show, Europe's largest consumer electronics trade fair held from Sept. 3-8. The new tablet is seen as a challenge to Apple Inc.'s mega-hit iPad.

   The current e-book readers, which support only black and white and are designed solely for consuming digital books, are doomed to lose a battle with multifunctional and Web-connected tablet PC devices, which enable e-book reading as well as hundreds other functions, Samsung's CEO suggests.

   "In terms of a business model, (e-books) might exist as a software application," Choi said.
Another senior Samsung official hinted at the possibility of completely pulling out of the e-book reader business that it entered recently, which would be a rare acknowledgment of failure for the company.

   "The production of e-book (readers) will continue but will not be expanded," Yoon Boo-keun, president of Samsung's visual display division in charge of e-book business, told Yonhap News Agency on the sidelines of the IFA show.

   "Because the Galaxy Tab has the e-book feature," he said, "we did not make a decision on when to stop production (of e-book readers)."

   It is clear that e-book reading is one of the most touted features of Samsung's latest mobile ambition, the Galaxy Tab. The company calls the Android-running tablet a "smart media device" that enables creating, consuming and sharing all types of media, including digital books.

   "In five years, people will enjoy e-books more than paper books," said Shin Jong-kyun, president of Samsung's mobile business, who oversaw the creation of the Galaxy Tab and the Galaxy S smartphone.

   The 7-inch touchscreen Galaxy Tab comes with a "readers hub" that Samsung said provides one of the best reading solutions available in the market. Powered by Japan-based online e-book retailer Media Kobo Inc., the readers hub shows book covers displayed on an image of a bookshelf, a design that conjures up Apple's iBook application.

   With the tablet, users can not only read magazines, books and newspapers, but also watch movies and TV shows via the media hub and get easy access to social networking services with the social hub, a selling point that Samsung thinks will help the device gain traction.

Thomas Richter, Samsungs Head of Portfolio Management, Telecommunications Europe, presents Samsungs new tablet device, the "Galaxy Tab" during a press conference at the IFA show on Sept. 2, 2010 in Berlin (AFP/Yonhap).

Samsung's big bet on the tablet PC market, however, is apparently made at the risk of losing its new e-book reader business.

   In February, Samsung unveiled a new e-book reading device, the SNE-60K, with features like wireless-fidelity (WiFi) connectivity and pre-loaded dictionaries. In South Korea, the company partnered with the country's largest book retailer Kyobo and vowed to make digital books available at half the price of paper books.

   Samsung and Kyobo declined to reveal the sales tally of the e-book readers but market watchers presume that their performance was disappointing due to the dearth of digital book content.

   Samsung has likely noticed that the download rate of digital content is much higher on its Galaxy S smartphone than its e-book readers. In the month of July, 330 digital books were downloaded from Kyobo's e-book store to the Galaxy S, about seven times more than the number downloaded onto Samsung's e-book readers, according to the book retailer.

   Analysts said it makes sense for Samsung to leave the e-book reader business as the company zeros in on its new flagship product that could raise a conflict of interest with existing business. It is also clear that the company sees a better future and a higher chance of winning in the tablet PC area.

   "When it comes to e-book readers, you have to fight with, which already has quite a big share in the market," said Kim Hyoung-sik at Seoul's E Trade Securities Co., who sees the e-book market surviving as a separate category from the tablet PC. "Rather than the e-book market, Samsung sees a future in tablet PCs as the new market just begins to take shape."

   Samsung's bet that multimedia devices will dominate future reading habits diverges from the projection of its biggest Japanese rival, Sony.

   At the same trade show in Germany, Sony, Samsung's rival in TVs and mobile phones, showcased revamped versions of its e-book reading devices using electronic ink and electronic paper that come close to replicating the reading experience of paper books.

   Media reported that Samsung is throwing down the gauntlet to Apple, while Sony is taking on

   "While the Kindle is a clear winner among e-book readers, the iPad has few competitors. So that has definitely become (Samsung's) global strategy," Kim said.