Samsung plans to adopt a hybrid pricing model for its artificial intelligence services, charging professional users for intensive cloud-based usage while continuing to offer basic on-device AI free to most consumers, JB Park, CEO and president of Samsung Southwest Asia, said.
“Samsung is taking a different approach that is not limited to on-device AI. We are also offering cloud-based AI through partnerships with other companies,” Park said at a media interaction in London last week.
As the industry moves towards cloud- and partner-based AI, Samsung’s pricing will depend on the nature and intensity of usage. Some partner services could come preloaded on its devices, but customers may have to buy tokens to access cloud-based features. “Sometimes you have to use tokens, and tokens are not free,” he said.
Cloud services also entail substantial investments in data centres. At the same time, memory-chip prices have risen more sharply than expected and could continue climbing for the next couple of years, Park said. Samsung has absorbed some of these costs over the past eight months rather than passing them on fully to customers.
“If you compare how much competitors have raised prices, Samsung’s increase has been relatively smaller because we have been absorbing part of the cost,” he said. The company is also bearing the financing cost of offering interest-free instalment plans of 24-30 months on flagship devices, he added.
Although Samsung has its own semiconductor business, Park ruled out preferential treatment for its Device eXperience, or DX, division, saying the group’s businesses compete internally. “It is in Samsung’s DNA. We compete internally, but we also compete externally,” he said.
Competition is particularly intense in India’s home-appliances market, where the presence of several Chinese brands has put profitability under pressure. “Much like the mobile market 10 years ago, Chinese brands keep knocking on the doors of the Indian market. Some arrive and fade away like a tsunami. I see a similar trend in consumer electronics,” Park said.
Despite the cost challenge posed by Chinese rivals, Samsung is seeking to retain its leadership in displays and home appliances, he said.
Nearly 65% of Samsung’s flagship smartphones in India are sold in tier-II, tier-III and rural markets, where demand is growing at a double-digit pace and faster than in the metros. Competition in foldable smartphones—which account for about 20% of Samsung’s global flagship sales—is expected to intensify with Apple’s entry into the segment.
Park believes the arrival of more brands will expand the foldable-phone market. Cutting prices, however, is not the answer to gaining share, he said. Samsung will instead seek to differentiate its devices by optimising applications for the foldable format and improving how they appear and function on larger screens.
Another differentiator is Samsung’s connected ecosystem of smartphones, watches, home appliances and displays, which can be managed together and made more energy-efficient with AI.
The company’s research and development centres in Noida and Bengaluru are also developing features for Indian consumers. One such feature is Pay Now, which facilitates timely bill payments through Samsung Wallet. It will debut on the company’s new foldable phones and initially be available exclusively in India.
The writer was in London last week at Samsung’s invitation.