“Samsung Electronics Co Ltd is losing smartphone ground not only to cheaper Chinese rivals but also at the high end to Apple Inc., a survey showed, in an ominous sign for the South Korean giant as Apple readies to launch its next-generation iPhone 6,” Se Young Lee reports for Reuters. “Samsung last week gave second-quarter earnings guidance that was far weaker than expectations and is on track for its worst quarterly profit in two years, a performance the company attributed in part to price competition and higher inventory levels in China.”
“Research firm Counterpoint’s survey of 35 markets accounting for nearly 90 percent of global sales found that sales for the eight-month-old iPhone 5s stood at 7 million in May, compared with about 5 million for Samsung’s flagship Galaxy S5, which was in just its second full month of sales after a late March release,” Lee reports. “Counterpoint said that the Galaxy S5 appeared to be doing worse than the Galaxy S4 had done in its early launch against the iPhone 5, with each selling about 7 million units a month.”
“The data suggests that Samsung’s problems run deeper than just the inventory buildup in mid-to-low tier devices that the company reported earlier in the month after disclosing weaker-than-expected second quarter guidance,” Lee reports. “Data from research firm Canalys showed that Samsung’s market share in the first quarter of 2014 fell to 18 percent from 20 percent a year earlier, while the likes of China’s Xiaomi and Lenovo Group Ltd made gains.”
“Analysts said Samsung’s new products such as the S5 did not offer enough to entice consumers to pay a premium over cheaper alternatives that were rapidly improving in quality,” Lee reports. “Apple, however, continues to be able to charge premium prices. Its iPhone 6 generation, expected to be launched as soon as September, is anticipated to sport bigger screens which would encroach on what has been a key Samsung advantage.”
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