Beleaguered Samsung finding it tough to compete Apple’s revolutionary iPhone
“More than a year into the overhaul of its smartphone lineup, Samsung Electronics Co Ltd has yet to find a way to reverse a slide in market share or margins, clouding its growth outlook and fuelling investor impatience,” Se Young Lee reports for Reuters. “The world’s largest handset maker is forecast on Wednesday to guide for its first annual increase in quarterly profit in two years following a dismal third quarter in 2014, but profits and mobile margins are expected to contract on a sequential basis.”
“Samsung has tried various fixes for its phone business. At the lower end it launched new products targeting markets such as India, while at the high end it switched from plastic to metal, introduced curved screens and cut the price for its flagship Galaxy S6 devices after sales fell short of high expectations in the second quarter,” Lee reports. “While those measures have lifted Samsung from its earnings trough, they have not been enough to regain market share from Apple Inc at the high end and Chinese markers at the lower end, or convince investors that the company is back on track for sustained growth. ‘Samsung is at a standstill,’ said Kim Hyun-su, fund manager for IBK Asset Management. ‘It’s having trouble finding a way to create new demand for its smartphones.'”
“Smartphone makers other than Apple are finding it tough to compete on any basis besides price, as new hardware features can be quickly matched by rivals. Samsung lacks service or software offerings that can pique consumer interest and not easily be replicated,” Lee reports. “Brokerage HMC Investment expects Samsung’s mobile division’s operating margin fell to 7.7 percent in the third quarter from 10.6 percent in April-June. Though overall phone shipments likely rose, the brokerage says the greater share of lower-end products and price cuts for the Galaxy S6 models weighed. Samsung’s semiconductor business probably remained its top earner for the fifth straight quarter as new premium phones came to market. In addition to its own devices, Samsung supplies chips to new Apple iPhones.”
