Jul 31, 2015 02:01 AM EDT
In an unexpected move, Samsung slashes the prices on its flagship phones. The move comes close on the heels of analysts reporting that Samsung made a miscalculation in rolling out not one, but TWO flagship phones. Also, analysts speculate that Samsung’s “Next Big Thing” campaign may have gotten a little too successful, sending consumers clamoring for the Samsung Galaxy S6 Edge more than “the lesser flagship,” the Samsung Galaxy S6. Because of the market’s preference for the higher-end flagship, Samsung was unable to keep up with the demand, resulting in angry would-be customers, as well as revenue losses.
The move to slash prices is speculated to drive sales, which, in turn, could increase the production on the higher-demand flagship unit. This way, Samsung will be able to recover from its reported losses as sales return to a steadier pace.
Another component of Samsung’s speculated recovery strategy includes rolling out its Samsung Galaxy Note 5 earlier than Apple’s expected device rollout.
According to ExtremeTech, Samsung’s operating profit in 2014 was 15.68 trillion KRW (South Korean Wan). In 2015, Samsung raked in only 12.88 trillion KRW, falling a whole 2.8 trillion KRW from the previous year. Analysts blame it on consumers opting for Samsung’s lower-end units, which bring them less profit, especially when Samsung couldn’t meet the demand for the S6 Edge. With slashing the flagship prices on the next round of factory releases, Samsung hopes to stimulate sales, keep units flying off the shelf, and raise profit, in general.
As it stands, Samsung Galaxy S6 Edge has prohibitive price tags reaching somewhere between $850 to $950. A whole sector of consumers would understandably be hesitant to purchase the flagship model due to the price tags. With the price slash, Samsung seems to hope to open up this hesitant demographic to purchasing the device, en masse.
Analysts say that the manufacturing costs of the flagship models may not be as exorbitant as the price tags. With Samsung Galaxy S6 and S6 Edge potentially flying off the shelves, the sales boost will hopefully do Samsung’s revenues a whole lot of good.
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