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Apple takes a bite out of Samsung profits

July 17, 2014



SEOUL: Samsung Electronics is losing smartphone ground not only to cheaper Chinese rivals but also at the high end to Apple, a survey showed, in an ominous sign for the South Korean giant as Apple gets set to launch its next-generation iPhone 6.

Samsung last week gave second-quarter earnings guidance that was far weaker than expectations and is on track for its worst quarterly profit in two years, a performance it attributed in part to price competition and higher inventory levels in China. Research firm Counterpoint's survey of 35 markets accounting for nearly 90 percent of global sales found that sales for the eight-month-old iPhone 5s stood at 7 million in May, compared with about 5 million for Samsung's flagship Galaxy S5, which was in just its second full month of sales after a late March release.

Counterpoint said that the Galaxy S5 appeared to be doing worse than the Galaxy S4 had done in its early launch against the iPhone 5, with each selling about 7 million units a month. The data measures retailers' sales to consumers as opposed to typical industry data that looks at shipments made by the manufacturer.

Galaxy S5 sales probably remained at about 5 million units in June, said Tom Kang, Seoul-based analyst for Counterpoint. He said the Galaxy S5 fell short of market expectations in terms of display quality and by using a plastic case.

"They made one mistake, one product that didn't hold up to expectations and they are paying the price," he said in a phone interview. "They will have to move forward and leave behind what has failed and focus on the next product."

Samsung declined to comment on Counterpoint's data or disclose shipment figures for the Galaxy S5, though a Samsung executive in April said that the new flagship device was expected to outperform its predecessor. - Reuters

Cape Argus


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Source: Cape Argus (South Africa)


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