Shin Jong-kyun, head of the IT and Mobile Communication (IM) division of Samsung Electronics, topped the list of corporate executives' annual salaries last year. This year, he took home roughly a tenth of what he had received in the first half of last year.
Shin received 1.64 billion won in the first half of this year, much lower than 11.34 billion won in the first half of last year. It probably has something do to with Samsung’s disappointing Q1 and Q2 performances. Shin bagged a 768 million won bonus in the first quarter and none in the second quarter.
The IM division’s Q2 operating profit was 2.76 trillion, up a mere 0.02 percent from the first quarter but down a bumper 37.6 percent from a year earlier. Though the IM division pinned high hopes on sales of the Galaxy S6 and the Galaxy S6 Edge, it ended up logging lower-than- expected sales.
Samsung has been silent on Galaxy S6 sales. A Samsung official said on August 21, “Disclosing them is against the company’s policy.” While Samsung is playing dumb, market research firms have slashed their Galaxy S6 sales forecasts to 45 million units.
When the Galaxy S 6 series made its market debut to much fanfare, its sales were estimated to hit an all-time high, 70 million units. A Samsung Electronics executive said, “Sales of the Galaxy S6 are expected to exceed those of its Galaxy predecessors.”
As sales of the Galaxy S6, expected to become a mega hit, got slower than anticipated, the Galaxy S6 has been dubbed as the ‘Shin Jong-kyun phone” in the electric and electronics sectors.
The press pointed an accusing finger at Shin Jong-kyun’s unsuccessful strategy, running reports with titles such as “Shin Jong-kyun’s failed differentiation strategy,” “What did Shin Jong-kyun bungle or “Shin Jong-kyun’s misjudgment.”
However, the Galaxy S6 was called ‘the Lee Jae-yong Phone’ in the first place. Right after Samsung unveiled the Galaxy S6 in Barcelona, Spain on March 1, prominent media outlets, such as the Wall Street Journal and the FT, all gave the Galaxy S6 a thumbs-up. Thus, the name of the Samsung Group heir apparent became a modifier for the Galaxy S6 in local newspapers.
As the Galaxy S6 got off to a good start, the press was busy finding links between Samsung vice chairman Lee Jae-yong and the Galaxy S6.
Press reports mainly said that Lee took care of the entire process of the Galaxy S6, from development and mass production to parts procurement and marketing.
At the end of 2014, Samsung had reshuffled its management owing to poor earnings reports but it retained Shin because Lee was ‘a good judge of character,’ according to some press reports.
At that time, the business world’s dominant view was that Shin would step down because the IM division’s quarterly operating profits continued its downward trajectory in 2014, posting 6.43 trillion in Q1, 4.42 trillion won in Q2 and 1.75 trillion won in Q3.
A newspaper reported that “Samsung’s biggest task is to find things than can embellish Lee Jae-young’s resume. One of them is the success of the Galaxy S6.”
Another newspaper reported, “Since the Galaxy S6 is the first smartphone launched under the leadership of Lee Jae-yong, it is very meaningful. The success of the Galaxy S6 is the pride of Samsung, as well as the driving force behind the world’ largest smartphone marker.”
Both newspapers included ‘the Lee Jae-yong phone’ in their report titles. Since then, the expression Lee Jae-yong phone has disappeared from newspapers.
On March 24, Lee had a chat with reporters at Gimpo Airport before flying to Beijing on his private jet.
He took out his Galaxy S6 Edge smartphone from his pocket and showed them a photo of him with his daughter and his mother Hong Ra-Hee. The photo was a selfie taken by his daughter.
Lee smiled, saying, “My daughter has really grown up, hasn’t she” His home screen wallpaper was also a picture of him and his daughter smiling at each other.
Saying, “It has excellent picture quality,” Lee showed the reporters how to scroll through screen pages and even let them get their hands on his Galaxy S6.
Asked whether he was satisfied with the new smartphone, Lee said, “Of course.” The Samsung heir apparent getting that much chummier with reporters was a rare sight. His behavior was understood as a show of his strong confidence in the Galaxy S6.
