Ahead of its official financial disclosure for third-quarter earnings, Samsung has announced profits are likely to drop by 60 percent compared to last year. The South Korean-based firm placed the blame largely on "intensified smartphone competition."
That competition includes Apple on the high end, and a growing number of Chinese rivals such as Huawei and Xiaomi on the low end.
Apple last month released its new iPhone 6 and iPhone 6 Plus, quickly breaking records with first-weekend sales alone of more than 10 million. Meanwhile, the emergence of numerous, lower-cost but feature-rich smartphones from China has forced Samsung to lower prices on its own handsets to compete in that segment of the Android market.
New Lineups Planned
Those lower prices have hit Samsung's bottom line even as it reported marginal increases in smartphone shipments during the third quarter. Overall, Samsung shipped proportionally fewer high-end phones, while being forced to drop prices for its better-selling, but older smartphone models.
Looking ahead to the fourth quarter, Samsung said it "cautiously" expects to ship more new smartphone models in the coming months. It also projects a "strong seasonal demand" for its TV products as the holiday shopping season approaches.
Samsung said it is getting ready to develop new lines of smartphones with new materials and innovative designs in an effort to "secure sustainable mid- to long-term growth despite intensified competition." It also plans to release a series of new mid- to low-end smartphones that better compete on both features and price, the company added.
Looking for a Holiday Boost
Samsung's new Galaxy Note 4 will go on sale this month, while the Galaxy Note Edge, a smartphone with a curved-edge display, is set for release later in the year. With screen sizes comparable to Apple's new iPhone 6 and iPhone6 Plus, it remains to be seen how Samsung's newest phones will compete in the so-called "phablet" market.
The company is also banking on a new lineup of wearable devices to help its sales performance during the coming holiday season. Those wearables will include a virtual-reality headset designed to work with the new Galaxy Note 4.
Despite the dismal profit figures it's reporting, Samsung remains the leader in the global smartphone market and also boasts the largest lineup of smartphones of any original equipment manufacturer. However, it saw its mid-year market share drop by 7 percent compared to 2013, according to analyst firm IDC, and "will need to focus on building momentum in markets dominated by local brands."
Horace Dediu, founder of the analyst firm Asymco, noted in a blog post on Tuesday that Samsung faces numerous challenges going forward, among them, "the pattern of commoditization in all its markets."
"Samsung is a very big company but many very big companies came to become small companies," Dediu said. "They all followed similar roads."
Image credit: iStock/Artist's concept.
Posted: 2014-10-09 @ 10:52am PT
Samsung would do better if they didn't keep updating their phones with software that I don't want. I can't remove the ones they put on my phone. I want a smartphone that is smart enough to know what I do and do not want. Samsung seems to think it knows better than I do about what to install.