Jul 12, 2015 09:24 PM EDT
Like a lab rat pressing the wrong lever over and over, hoping for different results, pundits are unanimous in noting how Samsung seems to be playing the same strategy—that didn’t work—over and over and over, and with tragic results. “Tragic” is the word, as profits are steadily falling, even plummeting, for Samsung. So much so, that some tech pundits are even stating that the company has “forgot the lesson it learned 2 years ago and now it's imploding,” and even “going into meltdown.”
Samsung is facing stiff competition from all sides: The success of Apple’s flagship phones, the iPhone 6 and iPhone 6 Plus, has eaten into its high-end market. Affordable alternatives from Xiaomi, Huawei, and Lenovo are eating into its mid-range line, and the low-end market has been covered by the numerous whitebox Androids. In short, Samsung’s profits are being eaten up from end to end.
In terms of numbers, here are the statistics from the Chinese smartphone market. These numbers were culled from IDC, a data research company:
Q1 2014 Market Shares:
1. Samsung – 19.9%
2. Lenovo – 10.2%
3. Xiaomi – 9.2%
4. Apple – 8.7%
5. Huawei – 7.8%
6. Others – 44.3%
Q1 2015 Market Shares:
1. Apple – 14.7%
2. Xiaomi – 13.7%
3. Huawei – 11.4%
4. Samsung – 9.7%
5. Lenovo – 8.3%
6. Others – 42.2%
Year-On-Year Unit Growth:
1. Apple: 62.1%
2. Xiaomi: 42.3%
3. Huawei: 39.7%
4. Others: -8.8%
5. Lenovo: -22.1%
6. Samsung: -53.0%
As you can see, Samsung experienced a 53% market share decline from 2014 to 2015. The trend continues, with profits from April to June 2015 continuing to slide another projected 4%. This does not bode well for the smartphone company.
What Went Wrong?
Observers in the Tech Industry note that Samsung’s falling profits might be due to the fact that Samsung released not one, but TWO flagship phones this year. They say that while the Samsung Galaxy S6 Edge has the innovative curved-edge design, the Samsung Galaxy S6 is just “another Android that works.” There’s no real defining feature for the Samsung Galaxy S6, and most consumers would rather go for the super-premium Samsung Galaxy S6 Edge.
But the problems don’t stop there.
Due to an overwhelming demand, retailers frequently run out of stock of the S6 Edge, leaving consumers with the Samsung Galaxy S6 as an alternative. However, with the $100 price difference between the two units, the company ends up losing $100 for each Samsung Galaxy S6 sold. Had they kept their inventory with only the S6 Edge and stocked their retailers and distributors well with ample units, they may have earned $100 more for every S6 Edge snapped off the shelf.
Aside from these, other factors are being considered:
• Samsung seems to have lost its “defining edge” that sailed it through to the top. In the past, their flagship phone releases would have stark differences from the previous flagship phones, with specs being bumped up with a major boost. Contrast that with the releases in recent years, where no significant changes were experienced by the end-user. In short, there’s nothing to amaze, delight, or “wow” the end-user.
• Because the Samsung Galaxy S6 isn’t much different from the rest of the other Android offerings, tech experts observe that the consumer would rather skip the $100 “savings” between the S6 Edge and the Galaxy S6, and go for a whole $500 savings by getting a more affordable model from another brand.
• Samsung stripped some of the features that set apart the Samsung Galaxy S5: No more waterproofing, no MicroSD card, and not even a removable battery. Most users will be able to live without the waterproofing, but the lack of a MicroSD card and a removable battery will send spoiled Android users packing towards the iPhone, or another Android. After all, what’s the use of an Android if you can’t replace its battery yourself, or at least be able to use removable media?
• Apple has successfully copied one of Samsung’s best features: The extra-big screen. No thanks to this non-innovation by Apple, Samsung has lost its vise grip on the big-screen market.
• Samsung seems to suffer from a media bias, of sorts: When Apple’s stocks run low, pundits see it as a proof of its demand. When Samsung fails to meet the demand for the Samsung Galaxy S6 Edge, it’s labeled as a misstep, even a mistake, for the company.
In spite of this dismal turn of events for Samsung, however, the company is aiming to recoup its losses by releasing the Samsung Galaxy Note 5 in mid-August, hoping to jump the gun before the iPhone 6 S line launches in September. Will it work for Samsung? Only the next quarter’s performance will tell.
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