Samsung Electronics’ profit plummets over 60% as people dump wannabe iPhones for the real thing

“With smartphone buyers increasingly choosing iPhones or lower-cost options over its devices, Samsung Electronics has been hammered this year,” Paresh Dave reports for The Los Angeles Times. “The latest news on Wednesday showed operating profit fell more than 60% to $3.9 billion in the third quarter compared with the same period last year, its lowest mark since the days of the iPhone 4 in 2011. Shares of the electronics maker have fallen more than 23% during the last three months as the company forecast gloomy days ahead for its smartphone business.”

“The stumble comes despite the South Korean company’s attempt to do more than any of its competitors to offer freebies to high-end customers in hopes of maintaining their loyalty. Samsung packages free trials and subscriptions to apps and periodicals with some of its phones,” Dave reports. “Galaxy phone owners can get upgraded to luxury suites at more than 40 venues in the U.S., and users in Asia can get discounts on lodging or food. There’s also been early access to content, such as music and movie clips.”

“Yet, 27% of people planning to buy an iPhone 6 last month were giving up on their Samsung phone, according to a survey by Digital World Research,” Dave reports. “‘I was surprised because Samsung has competitive products in the Note 4 and S5, yet Samsung owners were looking to change,’ said P.J. McNealy, the research firm’s chief executive. ‘One interpretation is that the iPhone 6 really is the hot product, the ‘it’ thing, the latest and greatest.'”

Read more in the full article here.

MacDailyNews Take: iPhone roadkill. 🙂

An iPhone with a larger screen option will hurt Samsung immeasurably more than myriad, unending traipses through the legal morass.MacDailyNews, May 2, 2014

[Thanks to MacDailyNews Reader “Bill” for the heads up.]

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44 Comments

    1. Those poor bastards of Samsung!! When you have TO PAY to your “costumers” in order they keep on using your products, then you’re in big, big trouble. The road to the bottom for Samsung is shorter than many think, we’ll see.

    1. Maybe they are really fair weather Fickledroids. Diehard Fandroids I think were always a small but vocal minority. It’s a total pleasure watching this happen and I hope it continues to squeeze hard on the thieving copiers.

  1. I had read an article about the specs of the coming Galaxy S6 and believe me the specs were very impressive. However, that’s really not going to make much of a difference in sales. Most of Samsung’s flagship smartphones have never been short on hardware and obviously that’s not what’s hurting sales. I just think Samsung’s largest audience is not made up of flagship smartphone consumers. The S5 is already plenty powerful and fully-featured and sales were not all that good. Adding more power and more features isn’t going to help Samsung’s high-end smartphone sales as long as Apple continues to build competitive iPhones.

    Samsung has already spent enough on marketing and it hasn’t helped but empty their pockets. Samsung’s smartphone business is pretty much finished in terms of profits. With the iPhone being in such high demand, there isn’t going to be many consumers wanting Samsung’s flagship smartphones this year or next, except for the diehard Samsung fans.

    1. It isn’t the tech specs that people want, it is the attention to detail, the environment, usability, transparent technology use for the end result.

      The majority of tech spec lover/users have as their end goal the tech specs and love fiddling with the machine itself. Usability is a side benefit for them. Sj recognized this on the Mac from the beginning. It isn’t the tech spec but user friendly transparent technology. Sure, tech minded folks can do what they want and they love the extra key strokes to achieve the end results. It empowers them. But Apple products are not about the tech prowess per se, they are about tech transparency (besides being powerful) and usabilty wrapped in a beautiful asthetic and functional design.

      1. Yep. This was a lesson the wanna-be “iPod-killers” had to learn over and over again. “Our player plays WMV files! Our player has an FM tuner!” It never worked, because no matter how much they tried to out-spec the iPod, their players were perceived as ugly and harder to use.

        Now it seems phone makers have to learn the whole lesson over again.

        There’s a reason Apple rarely, if ever, mentions technical specs in their ads.

        ——RM

    2. The last I heard, Samsung was spending $2 on marketing to realize $1 of profit. But that was when they were down only 29%.

      Like the generic Wintel PC market, Android market leadership can only be a temporary position.

      1. Boy, talking about delusional.

        1. Wintel has been leading the market since 1992 when Windows was invented. Before then, DOS/Intel PCs led the market. At no point has Apple PCs ever sold more than PCs running Microsoft operating systems. Ever.

        2. That includes today. Apple has a 17% market share. Hello! Apple is making more PROFIT than the Wintel makers because of higher margins. But Wintel still sells WAY MORE machines and will continue to.

        3. Android market leadership temporary? It is increasing. The reason is that now there are more companies making compelling Android phones than Samsung, and more Android companies are making a profit as a result. HTC and Huawei actually beat Samsung to market with 64 bit CPUs, and several premium Android phones are much better than the Galaxy S5. And the Nexus 6 (made by Motorola) is a better phone than the Note 4 in every respect but the stylus pen (and LG is now putting out phones that have a stylus pen to compete with the Note).

        Gotta end the wishful thinking fellows …

        1. Wow. Three rebuttal points, and none make sense.

          1. He never said Apple had a market share lead in PCs
          2. He never said Apple had a profit share lead in PCs
          3. When he said “Android market leadership” is temporary, he meant “leadership of the Android market”, not “Android leading the market”.

          You’re not much on reading comprehension, are you?

          ——RM

        2. About this…

          1. Wintel has been leading the market since 1992 when Windows was invented. Before then, DOS/Intel PCs led the market. At no point has Apple PCs ever sold more than PCs running Microsoft operating systems. Ever.

          I believe the Apple II was initially outselling the IBM PC (in 1981 and possibly 1982) which was running MS DOS, so that last sentence is not correct.

        3. You missed my point. I’m not talking about the leadership of Wintel or Android, I was talking about the companies selling the hardware. Google and Microsoft make the money, not the companies making the finished products. They try to make a profit while undercutting their competitors. That’s why Samsung will fade into the rabble. There are Windows computers and Android phones… few people mention the manufacturer.

          On the other hand Apple has no competition. That’s why they’re capable of making a profit. No one else makes iDevices or Macs so they don’t have to worry about undercutting the competition because there isn’t any. And apparently enough people like their products to keep the money rolling in.

  2. Samscum are stuck in the middle. Apple sells quality phones that everyone wants. Everyone else sells cheap phones that those who cannot afford an iPhone have to put up with.
    Over the last year other manufacturers have been competing with Samscum over pricing and as a result the latter has lost sales and share.
    Samscum had an advantage over Apple due to the larger phone formats. Now even that has disappeared and the next few quarters will not be pretty.
    Investors need to realize that Samscum is an opportunistic CE manufacturer. They see a new market, quickly copy the market leader and try to sell as many units as possible until other competitors start eating away at their margins. That’s their MO and it works for them but it will mean they will have big highs and lows.

  3. Well, as we’ve learned from the Android camp, people perceived Apple as copying Android’s (specifically Samsung’s) one massive, major, innovative feature — a larger screen. Yup. We copied it. Could not have come out with that ever, but now we stole the ONE thing that made Android so great. A screen.

    1. “but now we stole the ONE thing that made Android so great. A screen.”

      No, you also stole a ton of Android SOFTWARE features from Jellybean and KitKat and incorporated them into iOS 8. Those that you were successfully able to implement anyway. You guys are working on implementing more Android features from KitKat that you weren’t able to get into iOS 8, and you will be taking features from Lollipop from iOS 9.

      Meanwhile, Android has not taken a major feature from iOS in years. In fact, with Lollipop, Android is taking a major DEPARTURE from iOS. And now that this major phase of Android is done (total redesign with Lollipop and extending the platform to devices other than tablets and phones Android Wear, Android TV, and Android Auto plus hardware initiatives like Project Ara and Android One) it is going to be full steam ahead on the next big step: converging ChromeOS and Android. Yes, Microsoft and Canonical tried this and failed with “Windows Everywhere” and a single Ubuntu device that could be a phone, tablet and laptop, but Google is going to succeed because the resulting OS will use ChromeOS to access the cloud with Android apps to take care of offline tasks. You can already run some productivity and educational Android apps in ChromeOS (Duolingo, Sight Words, Evernote) and more are on the way.

      That will add a lot of value to Chromebooks. It will also add a lot of value to Android devices, because Google will beef up the Chrome browser for Android. And no, this will be stuff that Apple will not be able to put in iOS 9.

      1. And don’t forget, selling $300 Chromebooks will make any company rich.

        As long as Google owns the OS, the phones and Chromebooks will remain commodity items. Ask Dell, HP, IBM, Compaq, etc. how easy it is to make a profit selling commodity items.

        Who’s really interested in what’s happening at the bottom of the barrel?

        1. “Who’s really interested in what’s happening at the bottom of the barrel?”

          Consumers for one. Especially those in developing nations, the ones that Apple is basically telling to go take a hike. And also cash-strapped school systems who can buy 5 Chromebooks for the cost of one refurbished Apple laptop. Also, Netscape attempted cloud-based computing and failed. Google succeeded. So it is not like it is a new idea.

          1. There is no doubt that Google will find a market, however Google is primarily an advertising firm and a data mining firm. When you’re dealing with people who want to spend as little money as possible, how valuable will your data be and how much will advertisers want to spend advertising to people that want to spend as little money as possible? This is why Apple with it’s smaller marketshare was able to pay so much more to iOS developers than Google was able to pay Android developers.

          2. You also need to realize that Google is not a well trusted company (https://www.survata.com/blog/whats-worse-than-your-mom-seeing-your-web-history-the-nsa-google/). As more people realize that they’re the product, not the phone or Chromebook, the more people will be ridding themselves of Google products and services. I don’t want my email or documents mined for data as I’m sure many others don’t. I use YouTube a bit, that’s pretty much unavoidable, and Google Earth. I stopped using every other Google product or service because I resent being treated as a product and keep important private information backed up in the cloud.

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