Samsung, the world's biggest maker of mobile phones, is under threat. After years in which it has set the pace for smartphone sales, the South Korean firm announced yesterday that its second-quarter results will hit a two-year low, with operating profits of 7.2tn won (pounds 4.2bn) - down 24.5% from a year ago, and significantly below analysts' expectations of 8tn won. Revenues would be 52tn won, it said, down 10%.
Unusually, the company has put out a statement in which it sought to justify the lower numbers, variously blaming the rising Korean won - it has gained about 9% against the US dollar in the past quarter - excess inventory in
It's a litany of reasons - or excuses. As
Analysts have for some time been looking for signs of whether the company would be able to capitalise on its dominant position or would follow the previous mobile leader,
The lower profits come despite Samsung apparently shipping more smartphones than a year ago - an estimated 78m against 73.3m (Samsung does not release official figures). That's down from the all-time peak of 85m in the first quarter - even with the April launch of its flagship Galaxy S5.
Samsung's success has instead come from selling a huge variety of phones at every size and price, serving all the market. Apple has thrived by selling one (or more recently two) new phones, and one- or two-year-old models. Between them, the pair have captured virtually all the profit in the mobile handset business for the past couple of years.
But now Chinese sellers are able to compete on price at the low end, accepting lower margins to increase sales. And at the high end, Apple has continued to pick up customers and is forecast to gain even more with the expected September launch of larger-screened phones - a product category Samsung had previously made its own.
Samsung attempted to make itself into an Apple-like integrated player offering music and video streaming, and with its own Samsung-specific apps, but that hit a roadblock in January. According to reports by
The Information reported that Pichai threatened to walk away from Samsung - that is, block it from using the Android operating system. It would be a high-risk move for both companies, since Samsung sells about 60% of Android smartphones outside
Samsung is throwing its lot in with
Though Samsung is forecasting better results in the third quarter, with new devices in the pipeline, others think that rivals will only gain ground. "I think it's entirely possible we've seen a peak for Samsung in smartphones," said Dawson. And with smartphones generating 70% of
Analysts say Samsung's failure to build extra services means its smartphones appear undifferentiated and overpriced to many users Photograph:
Hispanic #1 Breaking News for Entrepreneurs, Professionals and Small Business Owners - HispanicBusiness.com
SEPTEMBER 22, 2014
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