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.”

Read more in the full article here.

MacDailyNews Take: Cut the thieves out of the Apple processor stamping equation, Mr. Cook. Your foot is on Samsung’s neck. Apply full weight.

It’s best not to mess with karma. – Steve Jobs

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15 Comments

  1. “Samsung supplies chips to new Apple iPhones.”

    That ought to read Samsung currently supplies some chips to new Apple iPhones.

    Due to Samsung proving to be an untrustworthy partner, Apple has boosted Samsung’s chip manufacturing rivals, so even if Samsung does maintain some chip foundry orders, they won’t be making anything like as much profit from those orders now that there are multiple sources vying for Apple’s business.

    If Samsung had played nicely with Apple, they would still be the default supplier for most of Apple’s major components, but their greed and stupidity has destroyed that relationship.

    1. Exactly, even their chip business will suffer greatly long term. Don’t be surprised if Apple moves entirely away from Samsung and even goes into the chip fab business.

  2. Several weeks ago, one poster – sorry, forgot his name – confidently predicted that Samsung would exit the Smartphone business by 2017, because they wouldn’t be able to justify their continuing mounting losses for much longer. So far, his prediction is on track.

  3. Apple to quit Samsung! That will only happen if they can get guarantees from other suppliers that they can supply and at a favourable price. Business is also pragmatic, if others cant supply, reliably the quantities that you need for manufacture you dont switch all your production. Also having multiple suppliers helps should any one of them get into trouble. You can’t cut off your nose etc. Guarranteed that Apple is already exacting a price from Samsung. Samsung will lose volume and will have to match or be lower in price. Apple will actively look at other suppliers, which will hurt Samsung, But kiddies Apple wont switch just because some petulant child wants them to. They will make a rational decision based on Economics although it will be tainted with a desire for at least some revenge. Samsung will pay in the long term.

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