News by Luke Jones on Thursday September 25, 2014.
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Samsung has faced some tough times of late, an interesting thing considering this is a company that still makes billions of dollars and is still comfortably the number one smartphone vendor. The fact is though the future is not as smooth as it once was and there are plenty of unanswered questions within Samsung?s Korean HQ. When one of your own divisions explains that things are not going very well then it is probably time to start finding new ways to do things.That has happened this week as Samsung Securities has laid out the brutal truth surrounding the current state of the company's mobile business. "Its smartphones have lost appeal - as evidenced by the solid performances of high-end Chinese models and unexpectedly strong iPhone 6 pre-orders," Samsung Securities wrote in a report this week. Samsung saw profits tumble over the last quarter across the board and the company laid much of the blame on its mobile division. Samsung Securities said its own profit estimate has been cut from 5.7 trillion Korean won to 4.7 trillion won and there is little doubt that Samsung faces its first crisis in a number of years. Since the days when the Galaxy S3 catapulted the company to the number one position in the global market, Samsung has felt untouchable. There have consistently been better smartphones on the market, but Samsung's model of keeping specs high, making dozens of devices, and getting the overall package just right has been a rich one for the company. However, there is an increasing feeling that Samsung is stale in the mobile world, in terms of design and software, while flooding the market is not working anymore. Consumers have more choice now and do not have to have the overly priced Galaxy smartphone. To be fair to the company, it is trying to do the right things. For a start Samsung has promised to focus on affordable quality in key markets, so hopefully we will see a change from the "we have a phone for that, but it will cost you" attitude the company has employed recently. Secondly, devices like the Galaxy Note Edge and the Galaxy Alpha show that Samsung is trying to change its design ethos and the way it builds smartphones. There is also a sense of identity confusion at the company as it is evident that Samsung would love to break off to its own Tizen platform, but is not willing to let go of Android just yet. What happens between Google and Samsung over the next few years could be defining. Those efforts may take time to bear fruit and it is hard to really get too worried about a company that has a mobile division that still makes multiple billions in profit. However, there are definite signs that Samsung is being squeezed and that the company is losing the considerable ground it had made up. It is worth remembering that Samsung are not Apple, the company cannot pull off the mass hysteria that follows Cupertino and sets the iPhone apart. Instead Samsung is on an ecosystem where it faces massive competition from newcomers like Xiaomi with its highly spec'd devices that are affordable because the company has minimal profit margins, while even LG is posing a threat these days. If Samsung thinks a fall from grace is impossible, it should look to HTC or Blackberry, two companies that used to ride at or near the top of the smartphone world but are now struggling to get by. True, those companies were never as big as Samsung, but then that just shows that the Korean company has a lot further to fall. The company has admitted that it could get worse before it gets better, but the longer the slide goes on the harder it will be to get out. Needless to say, Samsung can withstand plenty of dry quarters yet and is better equipped than most to soak up some market pressure, although every company has its limits. 2015 could become the most pivotal in the company's recent history and could shape the next five years of the smartphone market should Samsung have a good year or a bad one. Of course, Samsung is a multi-divisional entity, so the company will go on no matter what, but perhaps the days when the brand was guaranteed success in the smartphone world have now gone.
Luke Jones is the Managing Editor at MobileBurn.com and is the person you need to speak to about the content on the site. Luke studied creative writing at degree level before carving out a reputation as a freelance tech writer. He settled here at MobileBurn, where he reviews devices and contributes to the news, as well as overseeing the site's content and direction.