In the wake of declining profits, market share and stock prices, Samsung Electronics may be ready to shake up its leadership team. So says a report in the Wall Street Journal.
The paper cites anonymous sources who suggest co-chief executive and mobile head J.K. Shin could be pushed out of his assignment overseeing the mobile division. That may seem ironic, since he was at the helm during Samsung’s smartphone rise.
But the Journal’s sources speculate that co-CEO B.K. Yoon could take on those responsibilities, in addition to his management role in the company’s home appliance and television business. Samsung could not immediately be reached for comment and did not respond to the Journal’s calls seeking comment.
Where Is Samsung Going Wrong?
We caught up with Avi Greengart, an analyst at Current Analysis, to get his thoughts on the rumors. He told us Samsung is facing increased competition at the high-end since Apple has expanded the screen sizes of the iPhone.
Samsung also has tremendous competition from local vendors in emerging markets like China that are producing high-spec phones at mid-tier prices, and that is drawing consumers away from Samsung’s Galaxy S5 and to an extent the Galaxy Note, he said.
“It’s somewhat structural,” Greengart said. As he sees it, unless Samsung can dramatically raise the value its software provides so that consumers prefer its take on Android over competing Android devices, there isn’t much Samsung can do to combat the rise of Android-powered handset manufacturers like Lenovo and Huawei.
“Apple may be losing global market share in smartphones, but it’s actually gaining share with high-end buyers,” Greengart said. “So Apple is getting more of the most profitable segment of the business. That’s due to Apple’s software and services differentiation and that’s difficult for Samsung to match. They are certainly trying.”
Why Management Is To Blame
But is it management’s fault? Will a shake up help put Samsung back on the right track? Greengart said leadership bears part of the blame, especially seeing that some of these market issues have been obvious for years.
“Samsung is basing their products on a platform that they don’t control. Google is adding a lot of the software differentiation but that software differentiation is standard across the board for other vendors,” Greengart said. “Samsung has known this and tried to differentiate its software but in many cases has not added value. You can certainly lay that on the heads of management.”
Meanwhile, Greengart pointed to companies like LG that have caught up to Samsung on the premium products front and vendors like OnePlus that are producing high-quality products at extremely low prices. Samsung could have at least differentiated with high-end design and kept its design edge over companies like HTC and Sony, he said.
“One of the key problems they are having is that they built too many Galaxy S5s based on bad forecasting,” Greengart said. “That also can be laid at the feet of management.”