“For four years Samsung Electronics Co Ltd has basked in the success of its Galaxy smartphones, making billions of dollars competing with Apple Inc in the premium mobile market,” Se Young Lee reports for Reuters. “The coming years are set to be more sombre for the South Korean tech giant, as it is forced to slash prices and accept lower margins at its mobile division in order to see off competition from rivals including China’s Huawei Technologies Co Ltd and Xiaomi Inc in the mid-to-low end of the market.”
“Behind Samsung’s reality-check is the fact it is stuck with the same Android operating system used by its low-cost competitors, who are producing increasingly-capable phones of their own,” Lee reports. “It remains the world’s biggest smartphone maker but it is Apple that is reaping most of the rewards. While the U.S. giant’s smartphone sales in its last financial quarter fell short of market expectations, it is still estimated by some analysts to earn 90 percent or more of the industry’s profits.”
MacDailyNews Take: Apple sold 47.5 million iPhones in the third quarter, up 35 percent year-over-year. But some analysts had expected around 49 million. Some analysts also expected growth of more than the mere 35% that Apple posted (in the June quarter, no less) and wanted guidance of more than $51.13 billion – $51.13 BILLION! – in the 90-some-odd-day quarter over the dead of summer (sorry Aussies!) in which Apple’s all-time record for the September quarter, so far, stands at $42.1 billion, but Apple only gave guidance with a top end of $51 billion, not $51.13 billion for which some analysts had hoped. That’s what Lee means by “fell short of market expectations.”
Analysts say “Samsung will not be able to compete with Apple in the premium market based on hardware and will continue to trail the U.S. firm in the absence of a major technological breakthrough,” Lee reports. “‘Some still seem to think that a well-made product will sell well, but the Galaxy S6 showed that assumption is wrong,'” said IBK Securities analyst Lee Seung-woo, who predicts Samsung’s mobile division margins will fall to 9.3 percent this year – the lowest since before the first Galaxy S phone launched in 2010.”
“Acknowledging the headwinds, the South Korean firm said last week it will “flexibly adjust” prices of its flagship Galaxy S6 and S6 edge models to boost third quarter sales,” Lee reports. “Samsung cut the retail price of S6 edge smartphones in South Korea by around 100,000 won ($85.46) during July.”
Read more in the full article here.
MacDailyNews Take: Good. More misery for Samsung, please!
If the courts won’t mete out justice unto Samsung, it look like karma will.
An iPhone with a larger screen option will hurt Samsung immeasurably more than myriad, unending traipses through the legal morass. – MacDailyNews Take, May 2, 2014