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Samsung to Revamp Smartphone Strategy

Editorial by admin on Saturday November 01, 2014.

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Following second consecutive quarter where profits have tumbled, Samsung is facing up to an uncertain future. Sure, the company has a long way to fall before things get really seriously, but still the strategy moving forward has been muddled by a poor 2014, and the Korean company's standing at the top of the pile is under scrutiny for the first time. Now the company is being forced to revise its smartphone output and there will be plenty of changes afoot.

The Korean giant raked in $3.9 billion in profit through the period, a figure that would delight most companies but represent a huge slide for Samsung, the second quarter in a row where profits have tumbled.

The profit was a massive 60.1 percent dip from the same period last year when the company made $9.6 billion. Those were the good old days as Samsung has been struggling in 2014, and the problems seem to stem mostly from the smartphone business. The Galaxy S range seems to be the biggest culprit, with the S5 particularly failing to ignite consumers like previous models did.

The current Galaxy Note 4 was released too late to make a difference for this period, while midrange devices increased sales but could not offset the decline in high end models. Over the third quarter in 2013 the company drew in $6.34 billion, but this year has scraped to achieve $1.66 billion, the worst performance since the first quarter of 2011.

This calls for drastic action and Samsung says it going to change the way it releases devices. The company has been hit by all sides, an increasing Chinese presence (for Xiaomi) at the low end and mid-range, and by consumer tiredness at the high end, with the consensus being the Galaxy S5 flagship lacks enough changes from previous versions, while the device feels less premium alongside rivals.

The company has tried to address those issues and after the second quarter slump Samsung said it will become more efficient and release quality and affordable devices. The Korean giant repeated that after this week?s Q3 results, but it is worrying that Samsung is taking so long to kick those things into action. Since the Q2 loss the company has upped build quality with the Galaxy Alpha, but it was woefully overpriced alongside other similar handsets.

Other handsets, such as the Galaxy Mega 2 have been typical Samsung, expensive, moderately spec'd, and lacking that something special. Needless to say, the expensive Alpha and devices like the Mega 2 are not going to turn Samsung's fortunes around, so a deeper approach is needed. The Galaxy A range that launched this week could be the first step towards Samsung's new strategy. Made from metal, they are premium devices, but their entry specs suggest they will be affordable. Samsung has yet to offer a price, but the company will have to be competitive if it doesn't want the A series to become just another addition to the Galaxy line up.

At the flagship level the company needs to change several things that it is now getting a reputation for, such as plastic build and an improved UI. The company is already making the change to premium build materials, the already mentioned Alpha and the Galaxy Note 4 show that. However, Samsung's TouchWiz Android skin is widely derided and is the boggiest Android software from the big players, making devices with phenomenal specs suffer from lag. The company is apparently working on a lighter UI, but that will likely not see light of day until 2015, maybe on the Galaxy S6, a handset that is quickly becoming the most important Samsung will release in years.

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