Beleaguered Samsung to reduce phone models by up to 30% in face of plummeting profits

“Samsung Electronics Co. said it would reduce the number of smartphone models it offers next year, part of a move to cut costs to combat declining profit,” Min-Jeong Lee and Jonathan Cheng report for The Wall Street Journal. “The South Korean technology major said it would cut the number of models by about 25% to 30%, Robert Yi, head of investor relations, said during a presentation in New York. His remarks were confirmed by a company spokesman Tuesday.”

“In October, Samsung reported a 49% drop in its third-quarter net profit. Executives have vowed to make its operations more cost efficient,” Lee and Cheng report. “Samsung will “increase the number of components shared across mid- to low-end models, so that we can further leverage economies of scale,” an executive at the company’s mobile division said during an earnings call last month. Having fewer models will allow Samsung to better manage its inventory and supply chains, analysts say, at a time when demand for its Galaxy smartphones is waning.”

Lee and Cheng report, “Samsung’s margins from its mobile and information technology business were squeezed to just 7% in the third quarter ended September—the lowest level since the end of 2008, before it launched its first Galaxy smartphone.”

Read more in the full article here.

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  1. Which is why there was that bogus “from sources” story that got spread yesterday on Samsung winning the contract for the A9.

    Samsung is going to report a dismal fourth quarter. They have to prop up the stock price and the only way is to claim they have won an apple contract.

    1. Yes that was their whole strategy to win the war against Apple while knocking any other wannabes out of the race. They have lost on both fronts so doing what was never going to beat the opposition in the first place i.e. 1 to 1 against Apple at the top end or a few cheap options at the low end to combat the Chinese so one has to wonder how they expect it to work now. They actually were as successful as they were by saturating the market, massive marketing spend and low margins but it never hit that market domination it was meant to gain. In the post galaxy world its difficult to see anything but a slow decline and head on fights against the likes of LG, Sony and HTC in the medium sector. Long term it doesn’t look good its a matter of when all those idiot analysts who boasted their total domination accept the lunacy of their predictions.

    2. Yes, because all of the analysts (you know, the people who KNOW how to conduct business) say you have to get into the high volume, low cost market in order to be successful. That’s Apple’s problem — it’s not in the low cost market, as shown by the horrible iPhone 5C sales.


    1. This is really how Apple should have gone thermonuclear in the first place — simply out-design, out-innovate, and out-technoligify (yes, that’s a word, I just created it) Samsung.

      For those who still (for some reason) complain about Tim Cook, this is his strategy for Apple. The litigation was Steve Jobs, which proved mostly unsuccessful in stopping Samsung anywhere in the world. Yes, minor victories here and there, but it all takes too long to make much difference in the fast moving consumer electronics world.

      1. IMHO I think Apple’s strategy has been right all along. A thermonuclear attack doesn’t have to come from one direction. I believe they were going for a two pronged attack from the outset.

        Apple had to step up their technological game but that takes time and, I believe, they were distracted and slowed down by SJ’s illness.
        So they also went down the litigation route because that’s what you must do if someone is stealing your IP, even if you don’t think you’ll win big. It’s the precedent it sets that’s most important? Not so much the compensation.
        This had the effect of making the competition look in the courts direction while Apple quietly doubled down on innovation.

  2. Apple owns Samsung. Literally.

    Big pharma produces its own generic drugs to lock out smaller companies while keeping the prices of its name brands and generics high.

    Allegedly, Apple and Samsung are in a huge battle over phones, but Apple continally awards Samsung contracts worth billions that guarantee the cash to keep the phone “war” alive, thereby ensuring the market is saturated. This kills smaller companies that otherwise could have a presence, or at the very least prevents them from even trying.

    Samsung is Apple’s generic smartphone company.

    1. I don’t think Apple likes Samsung being it’s #1 competitor. I think Apple would much rather have Motorola, LG, or any number of other phone makers. It goes to Samsung because Samsung is one of the very, very few companies which can produce what Apple needs in the quantities Apple needs. If Apple had a real option, it would take its money elsewhere.

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