Behold TIZEN: Samsung Takes Google Software Challenge to TVs

Samsung Electronics Co. (005930)’s challenger to Google Inc. (GOOGL) software is moving from phones to big-screen TVs as the South Korean company tries to capitalize on the burgeoning interest in smart homes.
The world’s biggest maker of TVs will unveil the first sets powered by Tizen software at theConsumer Electronics Show this week, and all the Web-connected models it sells this year will run the operating system. The company also may demonstrate at CES how the TVs communicate with its washing machines, refrigerators and vacuum cleaners.
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The controlling Lee family is trying to reinvent Samsung as a purveyor of Internet-connected appliances to grab share of a market that may be worth $7.1 trillion by 2020. Samsung wants to generate revenue from Tizen applications and services just as Apple Inc. (AAPL) and Google do from their operating systems, and the Suwon-based company is emphasizing TVs and consumer electronics after falling a year behind schedule on a Tizen-based phone.
“In smartphones, there’s no chance that Samsung’s Tizen can edge out the two dominant operating systems,” said Claire Kim, a Seoul-based analyst at Daishin Securities Co. (003540) “But in TVs, Samsung may have a chance.”
Samsung’s rise to No. 1 in global phone sales depended on Google’s Android. Nearly all of the 243 million smartphones Samsung shipped through Sept. 30 ran the software, which Google typically gives away in return for mobile advertising revenue and a share of app sales.

Tizen Delays

Building the TV business around Tizen will help create “a much more intelligent and integrated system,” Won Jin Lee, executive vice president at Samsung Electronics, said in a Jan. 1 press release.
Samsung’s initial forays into Tizen haven’t developed a breakout hit. Its first phone using Tizen was more than a year behind schedule. The wristwatches Gear 2 and Gear 2 Neo were released in April, and both are compatible with many of Samsung’s Galaxy phones.
The company should improve its future competitiveness by pushing ahead with initiatives for its “smart home” and “smart health” businesses, co-Chief Executive Officer Kwon Oh Hyun told employees in a Jan. 2 message.
Samsung will be the biggest exhibitor of consumer electronics at the Las Vegas show, displaying TVs, tablet computers, smartphones, printers and cameras. The company will show off its Galaxy Note Edge phones with a wraparound screen, its virtual-reality headset and audio products.

500 Engineers

Operating profit at the consumer-electronics division, which oversees TVs and appliances, probably dropped to 250 billion won ($227 million) in the fourth quarter from 660 billion won a year earlier, according to the median estimate of six analysts surveyed by Bloomberg News.
In the third quarter, the unit’s profit dropped to 50 billion won from 350 billion won because of falling prices and competition with Japanese and Chinese producers.
Vice Chairman Lee Jae Yong is helping oversee Samsung’s transition as he takes more of a leadership role since his father, Chairman Lee Kun Hee, was hospitalized in May.
Samsung is transferring about 500 engineers from its mobile-phone division and allocating them largely to the Internet initiative, people familiar with the matter have said.