Samsung is in a smartphone free-fall from both ends – the high-end is being attacked by the new iPhone (although the new Galaxy Note 4 has yet to hit the streets for sale, which should help) and hit at the low-end by the cheap smartphones coming out from within China and India…a huge market potential that once was a safe haven for Samsung. Samsung is facing its fourth straight quarterly loss and just like a child, trying to ease the pain of a bad mark on their report card that is to come out later this month, they are already predicting a decline of nearly 60-percent over their third quarter on 2103…hoping to ease the shock.
Samsung is not going broke by any means as they have many more sources of income besides their smartphone division. They still expect to record a profit of $3.8 billion – true a drop of almost 60-percent from last year, but only a 20-percent decline in sales. Analysts were being a little kinder and only thought Samsung’s profit would tumble about 42-percent and sales would drop only 14-percent according to Thomson Reuters. Sanford Bernstein analyst Mark Newman said, “Q3 earnings is expected to be weak, brought down by poor performance in smartphones, with memory remaining the only strong point.”
Samsung could see this coming since last year – the high-end smartphone market is becoming so saturated and competition is at an all-time high. There was a time that Samsung cornered the market with their Galaxy S series and Galaxy Note series, but the HTC One M7 and M8, along with the LG G2 and G3 and even Sony, to some extent, are all producing top-notch devices that compete directly with the Samsung flagships. Then there is pricing…immediately after releasing the Galaxy S5, the pricing was reduced, even as low as BOGO and this cut dramatically into the profits even though sales were down only 20-percent. Samsung also has a lot of 3G inventory in China and it is becoming increasingly harder to selling them as the country shifts to 4G LTE technology.
According to our source and IDC, of the five largest smartphone manufacturers in the world, Samsung was the only one that saw shipments drop from last year during the second quarter. Fitch Ratings had predicted back in August that Samsung’s global smartphone market share would drop from 31-percent in 2014 to 25-percent in 2015.
Please hit us up on our Google+ Page and let us know what you think is causing the decrease in Samsung smartphone sales…as always, we would love to hear from you.