Samsung, Sony renew rivalry in medical devices

From: KoreaTimes written by Cho Mu-hyun

After trading blows over the last two decades for supremacy in the consumer electronics market, Samsung Electronics and Sony are set to continue their rivalry in the new arena of medical devices.

Only a decade ago, the Japanese company led almost every sector in the information technology industry while its Korean competitor trailed behind trying to catch up. Now, Samsung finds itself ahead in major markets such as smartphones and other consumer electronic goods. It remains to be seen whether Sony can strike back in the medical equipment market, where it’s experience and sophistication in optical technology and systems could provide an advantage. Both firms are planning aggressive investment in the business during the second half of the year.

Following a change of leadership from Howard Stringer to Kazuo Hirai in April, Sony has been vocal about its intentions to find new growth engines, one of them being the medical business. New CEO Hirai said during his inauguration press conference on April 11 that the company plans to make the medical sector a “business worth 100 billion yen ($1.25 billion) in the mid- and long-term.”According to statements released on the same day, Sony has set a sales target of 50 billion yen ($629 million) for its 2014 fiscal-year. It is planning to purchase 58.18 percent share of subsidiary Sony Entertainment, which in turn holds 55.19 percent of M3, a medical service provider. The main motivation behind the purchase is to take managerial control of M3.

Out of some 280,000 doctors based in Japan, around 200,000 are reportedly subscribed to an Internet information service offered by M3.

The Japanese firm is also planning to buy shares of Shinjuku-based lens maker Olympus, which saw its stock price plummet after admitting guilt to the biggest accounting fraud in the country’s history. Olympus makes the best endoscopes in the world, a must-have business for Sony in order to successfully venture into the medical arena.The electronics maker has seen a fourth consecutive fiscal-year loss, which it attributed to last year’s floods in Thailand that hampered its supply chain there, the global recession and a strong yen. It posted a record loss of $5.7 billion for the financial year that ended in March.

It has been trying to find leeway outside its electronics division, its established mainstay business, especially from Sony Pictures. Though Hirai vowed to regenerate the company’s television business to its “former glory,” the sector is currently dominated by the world’s biggest television manufacturer Samsung.

The Korean firm toppled Sony in 2006 and has been the top television maker for 26 straight quarters, according to research agency DisplaySearch. The agency said it had a global market share of 28.5 percent in terms of revenue. Samsung posted a record quarterly profit for the second quarter of $5.9 billion thanks to skyrocketing smartphone sales. But the company is leaving no stone unturned and has chosen medical equipment and biologics among five new key growth engines (the others being solar energy, car batteries and light emitting diode display panels) that together could bring in 50 trillion won ($44.1 billion) in revenue by 2020. The group acquired medical equipment maker Medison and renamed it Samsung Medison, and recently absorbed eight of its subsidiaries based overseas into the one here. The outfit is speculated to be looking into merging companies making equipment for magnetic resonance imaging and computed tomography.

“Samsung is considering various ways to expand into the medical business as we have chosen it as one of our new growth engines,” said a Samsung spokesman. He declined to comment on specifics of which companies in what country the group is looking into buying. The spokesman said that Samsung will manufacturer X-ray computed tomography equipment while Samsung Medison will make magnetic resonance imaging machines.