The last couple of years weren’t the easiest for Samsung. Although it is still the dominant smartphone maker in terms of units sold, the South Korean company has been facing huge challenges as they are struggling to keep their market share and, more importantly, their profit. Although revenue is doing OK, their profits have been on a downward spiral for the last two years and several factors are to blame. As a result, the company has been facing challenges which need to be overcome. In a recent speech, Kwon Oh-Hyun, Samsung Electronics CEO and vice chairman have admitted that there’s a need to adapt to the new environment to succeed.
First of all, back in 2013, Samsung was the dominant maker and had strong sales with their Galaxy S and Note flagship lines. However, the release of the Galaxy S5 in the following year, combined with Apple’s larger iPhone and the rise of several other smartphone makers made Samsung profits plunge as they faced falling sales and higher marketing expenses. The most iconic moment was in Q3 2014 when the company announced they would be facing a 60% drop in profit for that quarter. Things didn’t get much better as their profit didn’t grow until this quarter, thanks to stronger sales of their newer flagship phones.
To counter these new challenges, the company has been adapting its structure. “We should adapt ourselves to the new environment instead of sticking to our success in the past,” remarked the executive, continuing, “I believe now is the time for us to turn ourselves into a first mover from a fast follower.” a speech on which analysts say show that Samsung is about to undertake may be bigger than expected. In the past couple of months, there were several reports that the company would be laying off thousands of employees and who knows what is else to come. Additionally, Samsung announced a $9.9 billion share buyback program to address shareholder concerns about the payout.
As the upcoming Galaxy S7 is the next big investment for the company, it will be interesting to see what they are preparing in order to catch the consumer’s eyes in a moment when dozens of Chinese manufacturers are quickly gaining market share almost everywhere, such as Xiaomi, Lenovo and Huawei – by offering really good phones for a considerably lower price than those of Samsung.