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Sony and Samsung’s zero-sum rivalry may recur in the metaverse

In every great contest in history – from military commanders and sports legends to carbonated drinks and R&B divas – the desire to destroy an opponent often conceals a terrible fear.

And so, for years of bitter controversy, it was with Sony and Samsung – two of the biggest tech companies in the world, fiercely entangled and excelling in the battle for dominance. their value. Since then, their strategies and skills (an existing one it has an eye on cricket in the Indian Premier League, the other on a $17 billion Texan chip factory) has diverged. However, investors say that the pair also seem destined to meet again – in the metaverse.

The transformation of Samsung, South Korea’s most valuable company, from a maker of humdrum products in the early 1990s into a consumer electronics giant unrivaled in memory chips, batteries, cell phones and TV a decade later is a determined emulation of the rise of arch-enemy Japan. .

When Samsung’s brand value (according to Interbrand’s calculations) surpassed Sony’s in 2005, the logo was hardly more seismic. Even top Sony executives later privately acknowledged that a significant TV-panel joint venture between the two provided the stage in which it excelled in expertise.

But as it turns out, that humiliation is also the point at which competition begins to lose meaning – not least because the rest of the tech universe is rapidly moving beyond that kind of one-on-one competition, but because the two companies themselves have changed.

Samsung, whose experiments in content and software have never really worked, is realizing that its future lies in making hardware that is both a platform and a venue for the next generations of smartphones. consumer technology revolution. Sony, after some particularly painful years when a corporate slaughterhouse For sacred cows, it’s beginning to see that co-founder Akio Morita’s vision of content convergence and control is now more possible than ever in its history.

In recent weeks and months, the strategic gap between Samsung and Sony has become even more defined – even if the enforcement in both cases left some bewildered as to what might happen. next. Last week, when Samsung announced the US city of Taylor as the location of its most advanced semiconductor facility, the investment (Samsung’s largest ever in the United States) represented a huge hit. The company’s other decisive bet is on tech hardware and a product the world seems to covet. no limit. The following news of the company notification in a three-year, $206 billion investment plan.

However, despite that commitment being huge, Samsung is still a company with more to spend and yet, little indication of what it has in mind. Its third-generation heir, Lee Jae-yong, is fresh out of prison and is expected to unleash some of the growing M&A hunger during his absence. The most likely target will be memoryless chips and a further commitment to hardware, according to analysts.

Sony, meanwhile, has since 2018 embarked on what Jefferies analyst Atul Goyal describes as a global boom “raising eyebrows” with 40 acquisitions, partnerships and other acquisitions. stock-building activities. Together these have expanded the portfolio to include video game studios, streaming companies, film, animation, TV and music producers – and on the hardware side dedicated sensors . Over the past week, it has made progress on merger plan with India’s largest listed entertainment group, Zee.

While some investors have chosen to complain that the change is messy and a throwback to Sony’s bad days of dismal capital allocation, it should be, Goyal said. considered a coherent, transformative decision to continue the violation. Sony, which has long owned a Hollywood studio, an important music business and a huge PlayStation game empire, is clearly bidding for a more dominant leadership position.

While the strategies of the two Asian tech conglomerates look radically different today, they have potentially very important things in common. To the extent that anyone knows what the metaverse means and regardless of the form or mechanism of its distribution, investors have been looking to bet on who can dominate it.

For now, Sony and Samsung look like solid winners. For all the ambiguity surrounding visions of virtual worlds, augmented reality workplaces and everything else that have been crammed into the fledgling metaverse, the two elements seem believable. One is the ever-increasing hardware need for more memory, more non-memory chips, more sensors, and more screens. What remains is a convergence of ever-greater entertainment. If the metaverse does nothing else, it could reenact the unfortunate zero-sum competition as an epic pincer movement.

leo.lewis@ft.com

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