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Samsung Cutting Smartphone Product By 30% In 2015

News by Luke Jones on Tuesday November 18, 2014.

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Samsung has had an awful 2014 that has brought declining sales across the board and tumbling profits quarter on quarter. The Korean company has been left reeling by huge competition in Asia from Xiaomi and increased rivalry at the high end by the likes of Apple and LG. Samsung has said it would reshape its smartphone strategy to combat the problems and today we can see the company's new smartphone plan.

Samsung head of investor relations Robert Yi confirmed during a presentation in New York that the electronics giant would cut production costs and also release fewer smartphones in 2015. It will be interesting to see if both of those go hand in hand or whether production costs will be slashed across the board. Samsung is not known for making premium feeling devices, so I hope declining costs of production does not worsen that. However, it is more likely that production costs will fall because of the decrease in output.

The company has released dozens of smartphones of the last few years and has saturated the market at every niche and price points. Consumers have grown weary of Samsung's general output, considering it overpriced, not necessarily made with passion, and with bloated software. Of course, the company is the main smartphone player, so there are gems such as the Galaxy Note range, but in 2014 consumers really have spoken against the company by placing their money elsewhere.

After profits fell by 74% in the third quarter Samsung said it will now produce 25% to 30% less smartphones next year:

After maintaining smartphone operating-profit margins above 15% for 10 consecutive quarters, Samsung's margins from its mobile and information technology business were squeezed to just 7% in the third quarter ended September - the lowest level since the end of 2008, before it launched its first Galaxy smartphone.

Acknowledging the slide in margins, Samsung executives said during an earnings call last month that its new goal is to maintain a sustainable double-digit percentage margin starting in the New Year. They reiterated that pledge during this week's investor day meeting.

source: The Wall Street Journal

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Luke Jones
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.

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