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Report: Samsung's Future in the Balance?

News by Luke Jones on Thursday December 18, 2014.

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Earlier in the week, the guys over at PhoneArena conducted a poll and asked its readers whether they thought that "Samsung's dominion over the smartphone market coming to an end?"

Well, the results are in, and I won't spoil the website's own research by giving the exact figures (you can check them out at the source), but it seems the majority of people think Samsung's time as the smartphone top dog has come to an end. It is certainly easy to see why anybody would come to the conclusion, but we want to go a little deeper to see whether that is the case, or whether this has just been a bad year for the Korean giant. So, here?s the good, the bad, and the ugly for Samsung at the moment.

The Good

Samsung has had a torrid year and you will read why later. However, the company is fighting back from a position of first; that's right, the company is still the biggest smartphone manufacturer in terms of unit sales and market share... and it's on a global level too, as in every nation. This is not HTC, a company that has slid in the market and is trying to claw its way back.

Samsung is dominant, it's just that the company has lost a lot of those sales and a chunk of its market share. Make no mistake, every other company with perhaps the exception of Apple (Cupertino makes more profit) would want to be in Samsung's shoes right now. The third quarter was worrisome and paints a bleak picture for the future if things are not changed, but it was not a disaster as some would have you believe. Samsung still managed to shift 73 million smartphones through the three month period, more than just about every other company will sell through the whole of 2014.

There is plenty of doom mongering around, with some saying Samsung will collapse like Blackberry, which is utter nonsense of course. Blackberry (or RIM as it was then) missed the smartphone boat and misunderstood it too, whereas Samsung is a driving force in the market and is still an innovating company. Scoff at that last point all you want, but take a look at the Note Edge, love it or hate it, the device is an innovative one.

The Bad

As PhoneArena points out in its poll results, the current downturn for Samsung is more than a market fluctuation. This is no one quarter period because a rival had a hit device, this is a very real decline that is now spreading across a number of financial periods and shows an increasing pace the longer time goes on.

Through this year Samsung's market share has fallen by over 10%, while smartphone profits have tumbled by more than that. 73 million in sales in Q3 and continued dominance in the market share means Samsung has a lot in the bank before things get really dire, but no company can maintain continuous declining market and profit. As bleak as it sounds, everything has a bottom, and while Samsung's redline is a long way off, the company is extremely worried with how rapidly the market is pointing towards it.

The Ugly

When companies have huge unprecedented success that sweeps an industry, they get fat, and when they get fat they get lazy and greedy. Microsoft in the 1990s springs to mind and Apple is showing signs with the by the numbers Apple Watch and the frankly cheeky iPad Mini 3. Cupertino has time on its side because of its place in pop culture, but Samsung also got fat and made numerous mistakes.

The company's smartphones became stagnant, uninteresting, and just a touch boring. The company has over 70 products on the market and over its 50 or so smartphones it is very difficult to tell one from the other, especially at the mid-range and budget ends of the market. Even flagships like the Galaxy S5 have the hallmarks of a company going through the motions, and perhaps TouchWiz sums this up.

Samsung's own Android skin has long been derided for being laggy and bogged down, and it still is. The company simply did not listen to the consumer, and that is an accusation that can be levelled in other areas, such as phone design and pricing. It?s a cardinal sin in business to ignore the customer... what's that they say about them always being right? Well, the consumer is now starting to speak with money, by putting it into other companies and other smartphones.

What can be done?

Samsung is already taking sizeable measures to solve its current problems, and people high up in the company are losing their jobs. A new smartphone strategy for 2015 means the company is going to streamline its output, focus more on premium design, solid specs, and delivering quality to the now expectant and demanding lower ends of the market.

Xiaomi has given Samsung a bloody nose this year with its ultra-affordable and decent smartphones, and Samsung plans to match them with good devices in emerging markets. Xiaomi has been the chief architect in taking Samsung's market share. As the Korean company was looking over its shoulder at Apple, Xiaomi came from the other side and delivered a sucker punch. One could argue that Samsung's massive hold over the market was an anomaly anyway, that its huge market share was not normal and now it is declining to a more steady level.

The Chinese brand (Xiaomi) makes virtually no money on its smartphones. It is arguably a model that cannot be sustained in the long term, but in the here and now it is causing big problems for Samsung. A direct fight with Xiaomi now seems inevitable, but it is one Samsung has the resources to win and the ability to as well.

2015 will be massively important to the company and the success of marquee devices like the Galaxy S6 will prove vital in Samsung's drive back to the pinnacle of the industry. However, keep an eye out on the lower end smartphones too, because they are the ones that could determine whether Samsung will ever regain the same level of dominance it once enjoyed.

source: PhoneArena

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About the author

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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