Samsung replaces chief of struggling mobile unit

The appointment of Dongjin Koh, who oversaw Samsung Pay, may suggest the South Korean electronics giant is redoubling its focus on software and services.

Samsung has named Dongjin Koh the head of its mobile business.

Samsung

Samsung might be doubling down on software.

The South Korean electronics giant said Dongjin Koh, who most recently ran Samsung's mobile research and development operations, will take over day-to-day management of the company's huge smartphone business. JK Shin, who has served as the head of Samsung's mobile communications business since 2009, will remain CEO of the mobile division and focus on long-term strategy.

Koh, 54, oversaw the creation of Knox security software and Samsung Pay, two of the company's more successful software products. Last week, Samsung said 4 million users have adopted Knox, software that allows customers to use one device for both personal and business use, since it was introduced two years ago. Samsung Pay, which competes with similar mobile-payment offerings from Google and Apple, has added users at a brisk clip since launching a few months ago.

The appointment suggests Samsung is renewing its focus on software and services, an area in which the company has struggled, as it seeks to revitalize its smartphone business. Though it remains the smartphone king, Samsung has been hit hard by saturation at the high-end and intensifying pressure on the low end. The company has suffered declining profits and market share over the past two years due to waning consumer enthusiasm for its smartphones.

"They're looking at it as the market is going to remain challenging, can we have someone in charge who might have a different background," said Carolina Milanesi, an analyst with Kantar Worldpanel. "This guy seems to fit the bill."

The appointment, announced Tuesday, came as part of Samsung's annual executive shakeup, which prevents leaders from getting too complacent in their current roles.

Samsung has had difficulty generating enthusiasm for many of its software products. The company leans on Google's Android software to run the vast majority of its smartphones and tablets, while its own Tizen operating system has struggled to gain a foothold. Meanwhile, Samsung has scrapped many of the services it's created, like the Samsung Media Hub and Milk Video.

It also killed off a global, company-wide business tasked with building software and services that work across its various devices.

Samsung declined a request for more information and executive interviews.

The company had pinned its hopes for a turnaround in the coming quarters on sales of the Galaxy S6 and S6 Edge, the new flagship handsets released to critical acclaim in April. The two devices feature metal casings instead of Samsung's normal plastic, and the Edge also includes a screen that curves around the sides of the device.

Despite Shin's prediction that the flagship S6 line will set a company record for unit shipments, Samsung said in July it would cut the price of the smartphones to spur sales.

To get a leg up on its competition, Samsung has reportedly moved up the launch date of its next flagship smartphone, the Galaxy S7, to January. The move would break Samsung's tradition of introducing new flagship smartphones at major global tech conferences, such as Mobile World Congress in Barcelona. But it might also give the company an opportunity to undercut sales of the iPhone 6S, which launched in September, by getting the device into consumers' hands sooner.

While the business has shown signs of stabilizing over the past few quarters, analysts say Samsung's mobile heyday is probably over, even with a new executive in charge.

"Samsung's mobile business is likely never going to get back to where it was," Jackdaw Research chief analyst Jan Dawson said. "The headwinds in the industry are such that the glory days are past."

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