It is no longer business as usual for the South Korean major, the once dominant market-share it held in the mobile markets has dropped sharply. Worse still, Samsung has announced its profits for the third-quarter would decrease by about 60% and sales equally falling by 20% in comparison to the same period last year.
What could have caused this sudden fall in revenue and profits and why should Samsung be scared about its future? You would recall, that few weeks ago, the leading mobile vendor released a statement announcing the shutdown of its PC business in Europe. Barely eight-months after Sony, who is currently in red sold-off its PC business to Japan Industrial Partners Inc.
With the events happening in the mobile community, Samsung would be facing an uphill task to remain relevant in business.
Samsung Galaxy S5 didn’t have the spark commensurate with all the hype and buzz that surrounded it. Trends like this shows that the brand which usually commanded unconditional mass appeal from users, may have lost its charm.
Pumping different kind of smartphones into the market with outrageous price tag may have worked in the past, but it appears consumers are taking a break for the first time, and asking themselves questions, “Does my phone really needs an upgrade?”
Industry experts blame the strong sales of the iPhone 6 and 6 plus for Samsung’s plummeted revenue. But that’s clearly not the case; Samsung has been experiencing decline in overall market share, even before the announcement of Apple’s flagship devices.
In the second quarter of 2013, Samsung accounted for 32% of global smartphone sales [IDC] and by the same time this year, that figure fell by 25%. Could the decline have been caused by Apple alone? Certainly not!
The Buyer’s Mindset
Consumers are generally tired of spending more, just to get access to one feature. For Samsung, it is almost impossible to determine how many smartphones it has in the market. Pumping different kind of smartphones into the market with outrageous price tag may have worked in the past, but it appears consumers are taking a break for the first time, and asking themselves questions, “Does my phone really needs an upgrade?”
The answer is possibly a yes! But Samsung is no longer the benefactor of such decision. Emerging mobile vendors like Huawei have been able to lure consumers into their camps, purely because they have been able to mix the right kind of features for an affordable price.
Samsung’s bragging rights were obviously on hardware design, and it was able to radically change the buyer’s mindset with its large screens. This obviously set them apart from the competition; even Apple wasn’t comfortable with the large screen philosophy. But all that is history, there are a lot of screen-sizes available on the market and consumers now have an option. Apple’s iPhone 6 plus has been driving consumers crazy, and all Samsung could do was to try to steal the show to gather recognition for it Galaxy Note 4. The attempt appears to have suffered an embarrassing fate.
This is where Samsung would be asking itself questions. There is really nothing Samsung can do, they have no control over how Android should operate. This leaves their smartphones without much difference from the competition, apart from the addition of a few features that only appeals to the minority.
Samsung wants to break Google’s monopoly by going beyond the hardware and exploring the software world with Tizen OS which will establish an ecosystem centered on Samsung. Samsung has been pushing Tizen, although, we are yet to see it fully in action on a smartphone. Two attempts to showcase Tizen powers were aborted by the South Korean Major while it continues to fail in making users exclusively use their messaging and other in-house services on its products.
Samsung has been squeezed at all ends; the competition has become much intensified. Xiaomi is making wave in China, Gionee is calling the shots in India and Tecno is solidifying its presence in Africa, especially Nigeria which is Africa’s biggest mobile markets.
In the United States, Apple is giving Samsung a run for its money while Huawei and LG battle it in Europe. What cards do Samsung have left in its gallery?
Samsung believes hardware can still play a major role in remaining atop, “Samsung is preparing new smartphone lineups featuring new materials and innovative designs, as well as a series of new mid- to low-end smartphones with strong competitive positioning on both hardware specifications and price.”
Do Samsung really think this plan is the missing link?