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Why Samsung’s smartphone business's decline could be terminal

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Why Samsung’s smartphone business's decline could be terminal

Samsung is in a mess. The Korean company, for so long the tech giant which had the ability and the products to stand up to Apple, is once again reeling from some shocking quarterly results, thanks in part to its failure to foresee demand for what is clearly its best-ever smartphone.

Share prices are down, with Samsung confirming a profit loss for the fifth quarter in succession.

Most worryingly, profits in the supposedly lucrative mobile division were down by 38% year–on–year, despite the launch of both the Galaxy S6 and Galaxy S6 Edge.

This says a lot about the state of Samsung’s smartphone business.

samsung galaxy s6 edge contacts

For one, its cache has clearly declined to such a point that it just cannot compete at the top–end of the market with Apple.

The years of plasticky phones may have ended, but consumers would still clearly rather get an iPhone or a top–end rival Android device than the Galaxy S6.

In large part, this is Samsung’s fault. It admits that it failed to foresee huge demand for its Galaxy S6 Edge, the curved screen phone which has won plaudits for its excellent design and unique take on a product that has become staid in recent years.

However, Samsung didn’t order enough screen parts to meet demand, believing the standard S6 was what consumers really wanted.

As oversights go it’s a pretty major one. When Samsung revealed poor results in April, many predicted it would bounce back thanks to the Galaxy S6 and Galaxy S6 Edge.

samsung galaxy note 5 galaxy s6 edge plus leak 1

That has not been the case, with the company now saying it’s going to ‘adjust’ the price of those phones to bolster sales.

It will launch two new devices, the Galaxy Note 5 and jumbo-sized Galaxy S6 Edge Plus at a New York event in August.

All hope will now be pinned on those phones to arrest the slide. But it’s starting to look very much like Samsung’s mobile decline is terminal.

It seems to have rested on its laurels for too long and was not prepared for the surge of demand for Apple’s new–look iPhones last year.

iphone 6 iphone 6s plus

Now it’s going to have to face another long fight to stay at the top of the pile, while its budget business also takes a hit in China thanks to falling sales and the growth of Xiaomi and Lenovo.

Samsung says it’s going to make more mid–range phones, but its overblown product line was perhaps what got it into this mess in the first place.

Focusing just on the higher end may end up saving Samsung’s mobile business. But with competition improving all the time, don’t count on it.

Category: News
Tagged: costs & tariffs

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