South Korean electronics giant Samsung took a big gamble on its flagship Galaxy S6 and S6 Edge smartphones, but apparently failed to hit the jackpot, according to new earnings results. Both Samsung’s net earnings and revenue dipped in the company’s second fiscal quarter as the two phones failed to provide the boost the company was counting on. Now, Samsung is suggesting that it might reduce the prices of the phones to charge sales.
Overall, Samsung’s net income in the second quarter was $4.9 billion, down 8 percent from $5.3 billion in the same quarter of 2014. Total company sales dropped 7.2 percent year-over-year to $41.3 billion. Sales in the company's mobile division dropped 7.3 percent from a year ago to $21.73 billion. The mobile unit made an operating profit of $2.35 billion -- a sharp drop from the $3.76 billion it raked in during the same quarter a year ago.
The results might be indicative of the tough battle Samsung faces in trying to gain market share from Apple, whose iPhone is the dominant player in smartphones. Also hurting Samsung are the many inexpensive smartphones made by Chinese manufacturers.
The Galaxy S6, which starts at $199 with a 2-year plan or $695 off contract, has received mostly favorable reviews. The smartphone has a 5.1-inch 2560x1440 Quad HD AMOLED display with a resolution of 1,440x2,560 pixels, and is powered by a 64-bit, octa-core Exynos 7420 processor. It also comes with a rear-facing 20-megapixel camera, with a 5-megapixel shooter facing forward.
On the eve of phone's release in April, however, many analysts wondered whether the features were enticing enough to convince buyers to upgrade from their existing Galaxy S5 phones, let alone spring for an S6 instead of a comparable smartphone from a competitor.
There’s no word yet on how Samsung plans to address the disappointing revenue figures, but it did drop a hint when it announced them. While acknowledging the struggles of its IT and mobile communications division, Samsung said that "sales momentum for high-end products will be maintained by adjusting the price of the Galaxy S6 and S6 Edge and introducing new premium smartphone models."
New middle- and low-end models will also be introduced, the company said. At a media event in New York on August 13, Samsung is expected to debut the Galaxy Note 5, its latest phablet, and possibly a version of the S6 Edge, the Galaxy S6 Edge Plus, with a bigger screen.
"In order to drive up the shipment, we will actively respond to the market, which could have a negative impact on our average sales price," said Park Jin-Young, the company’s vice president of mobile communications, during a conference call with reporters.
Samsung has not released sales figures for the Galaxy S6, but a recent report from IDC found that Samsung shipped 73.2 million smartphones in the second quarter. That’s down from 74.9 million units in last year’s second quarter. Samsung’s market share in that category also fell, according to IDC.