E-READER STRATEGY

by Daniel Kamerling2/19/2010

2

Market Position: Strong Design, Weak Content

Media Players Design

e-Reade

r

Mobile Compu

terMobile PhoneMP3

Player

Books

Periodical

Content Multi-Function Readable Price

Samsung customer

Samsung customer

Distributor

Content partner

E6, E101

3

Market Position: Entering during Growth

Samsung

>20%

Samsung

>20%

Amazon

(60%)

Amazon

(60%)

Sony(35%)Sony(35%)

OtherOther

₩350k($300)

3M

₩230k($200)

15M

5X Growth1

3 years

GoalCapture 20-25% of the US e-Reader market in the next 3 years resulting in revenues between ₩340B – 850B ($300M-750M)

DemographicsTech

OptimistAvid

ReadersUpmarket

FemaleAge 47 39 42

Gender (% male) 54% 60% 46%Income (won) 132M 100M 96MIncome (USD) 116k 88k 84kBooks/Month 3.5 5 3.7

% Online Shopper 1.50% 5.60% 24%

2

1E-Reader sales projection: “How Big Is the eReader Opportunity?”, Sarah Epps, May 20092E-Reader adopter demographics: “Who Will Buy An eReader?”, Sarah Epps, July 2009

Adoption Curve

4

Strategy: Enrich the Book Lover Experience

Provide Consumers with the #1 e-Reading Platform

Platform•Cross-device Purchasing•Social Networking Tools•Self-Publishing

Platform•Cross-device Purchasing•Social Networking Tools•Self-Publishing

Content•Publishers (HarperCollins)•Newspapers (Tribune)•Online (Blogs)

Content•Publishers (HarperCollins)•Newspapers (Tribune)•Online (Blogs)

Technology•Benefits (Screen, Quality)•Features (Color, Video)•Applications

Technology•Benefits (Screen, Quality)•Features (Color, Video)•Applications

Consumer Target – Avid Readers, Upmarket Female

Consumer Target – Avid Readers, Upmarket Female

Samsung•Reputation and capability for engineering excellence•Samsung Apps released cross-platform•>227M installed base of mobile phones (e-readers)1

Samsung•Reputation and capability for engineering excellence•Samsung Apps released cross-platform•>227M installed base of mobile phones (e-readers)1

Partnerships•Google to provide 500k books in public domain

Partnerships•Google to provide 500k books in public domain

1Samsung: Earnings Release Q4 2009

5

Strategy: Reach out and grow the user base

Short Term Long Term

Target

Channel

Price

Tech

0-3 Years >3 Years

Publishers

Avid Readers Upmarket Women

Self-Publishing

Mobile Phones

Electronics Retailers

<₩230k ($200)<₩350k ($300)

VideoColor

Discount Retailers

Partners

FocusHigh-tech features for early adopters which convert to champions

Social and convenience value for discerning product mavens

Content is the gatekeeper to customers

Publishers are the gatekeeper to content

6

Success and Risk Factors

Success Factors Risks Factors

Competitors

Customer

Latest Technology

Diverse ContentDiverse Content

Active Community

Backward Integration – Publishers

Customer Loyalty

Division Co-Operation

Division Co-Operation

Crowded Market

Device Substitutes

Component Shortages

Piracy – China

Point of Sale Demo Backward Integration – Retailers

Price War

Component Supplier

Product

Markets

Emerging Markets – Brazil, India

Single Portal Access

Single Portal Access

Late to Market

Internal

Mobile LeadershipBusiness Channel

Product Definition

Cost Leadership

7

Success Factors: Partnerships and Applications

Revenue sharing (>30%1), open pricing

Newspapers, textbooks, publishers

Subscription based paymentReduce upfront price to consumerCross-device purchasing

Service plan integration, Samsung AppsSocial networking tools

Self-publishing2 / Rating system

Agile feature integrationHire talent, acquisitions, investments

Design to value Appeal to core needs of customer

1WSJ, Amazon.com, Macmillan Settle Price Dispute2CNN, Cell phone stories writing new chapter in print publishing

8

Risk Factors: Backward Integration and Internal Co-operation

Ambiguous Market•Devices designed independently•Data on customer habits not shared•Territorial behavior as market evolvesAssign Oversight•Establish/support an e-Books manager within Samsung Apps•Clearly define product space, inclusive and exclusive of e-Reader

E-Reader Value Chain

Solution

Problem

Backward Integration•Skiff backed by Hearst Corp.1

•BeBook is a rebranded Jinke reader

Empower Customer Content•Encourage network effect by providing publishing/review tools. •Focus sales on favorable terms for device components.23

1Hearst-Backed Skiff e-reader to debut this year2Jinke HanLin CPU supplier3Samsung is the Apple iPad processor supplier

9

Summary: Path to e-Reader Leadership

Market Opportunity:₩340B – 850B ($300M-750M)

Strategy:Enriching the Reading Experience

•Publishers•Subscriptions

•Color•Video

•Cross-device•Samsung Apps

Provide Consumers with the #1 e-Reading Platform

10

Backup Slide: Global Perspective

No major players

Few entrants

Low adoption, Content support

Largest market, 25 million @

$199

Major publisher, #2 @ >172k books/year