Samsung Heading for Roughest Quarter in Years

Samsung is heading for their roughest quarter in years, after enjoying a couple of good years as the dominant Android phone maker. They had a good slice of the pie with the top end phones especially with their flagship Galaxy S and Note series but those have face steep competition with resurgent sales and demand for Apple iPhone 6 and 6 Plus. In addition, the budget segment is equally feeling the heat due to increasing dominance from Chinese brands such as OPPO and Xiaomi.

With their earnings report out later this month, Samsung Electronics Co. on Tuesday announced that its estimated quarterly operating income has fallen to its lowest level in more than three years, partly dragged down by weak sales of its flagship Galaxy phones. Former Apple users who were lured by big screen phablets from Samsung can now returned to Apple, and increasingly, there are many more brands to choose from across the Android spectrum, even budget options such as Xiaomi Redmi Note, which is selling very well in Singapore, and in big markets such as India, and China.

Analysts have repeatedly cut forecasts of Samsung’s profit this year as Galaxy sales lagged expectations. They say earnings in the quarter ending in September could suffer their biggest decline in Samsung’s recent history.

However, the Galaxy Note 4 would be poised to be released in Singapore from Oct 11, could help Samsung see a better upcoming quarter. The company had brought forward the launch of the Galaxy Note 4 after Apple unveiled the iPhone 6 Plus. Sales in China would also have a head start, with Galaxy Note 4 already available. Samsung tie up with luxury brand makers such as Swarovski and Mont Blanc would help Samsung establish a premium brand following for its products and help strengthen the brand image as a luxury product.

Samsung would be hard pressed to continue their market dominance from the last few years, and would need a radical new product or design to maintain their lead as the top mobile phone manufacturer. Phone technology has reached a stage where every other manufacturer can release a similar spec phone. Software differentiation is a challenge on the Android platform, and Samsung has actually received more flak for the bloatware (Samsung apps, Touchwiz) that comes installed on their mobile devices. One possibility could be the introduction of the curved screen technology evident on the Note Edge, and use that on a platform such as an Android-wear or Tizen-based watch. The curved screen on the watch might prove more useful than on a mobile phone.

Despite lagging in the phone market, Samsung has made plans to further investment in semiconductors. They had announced a $14.7 billion investment plan to build a semiconductor fabrication plant in the South Korean city of Pyeongtaek. It would be operationalised in mid 2017. This could indicate that the company forward strategy could be to focus on component supplies, where it has remained the dominant supplier. Demand for chips would be expected to increase due to adoption of mobile phones and further fuelled by Internet of Things (IOT) adoption.

Sean

Sean is a tech geek and star wars fan. He loves playing with new gadgets, writing little code snippets in Python, JS, and dabbling with Android programming from time to time, while keeping a lookout for the next biggest happening in the world of tech!

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