While most large networking and telecommunication vendors use acquisitions to add new technologies and products, a senior executive at Samsung Electronics ruled out buying other companies to expand the company’s fledgling enterprise networks division into new areas.
“Certainly, I would like to expand and spend money to buy other technologies and companies, but that’s not how we do things,” said Youngsoo Ryu, senior vice president at Samsung’s telecommunication network business division, in an interview at the International Telecommunication Union (ITU) Telecom World 2006 conference and exhibition in Hong Kong.
Samsung has never used acquisitions to expand into new areas, growing successful telecommunication, semiconductor and consumer electronics businesses from scratch. The company will pursue the same strategy with its enterprise network products, Ryu said.
Samsung is the exception rather than the rule. Acquisitions have been central to the growth of many large vendors. For example, Cisco Systems acquired 115 companies between 1993 and 2006, and the company’s merger and acquisitions group shows no signs of slowing down.
Instead of acquisitions, Samsung is counting on partnerships with other vendors to round out its own offerings. “There are other avenues we can pursue to achieve these goals, by building an ecosystem of partnerships and creating open structures that allow us to invite other companies to come in and share our success,” Ryu said.
“That’s the direction we are going,” he said.
One example of this strategy is Samsung’s partnership with Avaya, announced in February, to jointly develop IP telephony products. Under terms of that agreement, the two companies agreed to jointly develop and market products that combine IP voice capabilities with video and data.
Telecom World runs through Friday.
-Sumner Lemon, IDG News Service (Singapore Bureau)
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