Samsung smartphones are number one in terms of unit volume. However, the Korean consumer electronic giant’s profits have been shrinking, a 60 percent drop in calendar Q3 alone, for three straight quarters. Samsung smartphones are between competitive Apple iPhone rock and XiaoMi hard place.
Samsung Electronics has announced that it expects profits to fall 60 percent to about $3.8 billion. That is still billion with a “b”, so nothing to worry about, right?
Maybe, but I wouldn’t want to be in those meetings, fly on the wall or otherwise.
The takeaway: Samsung’s profits are getting smaller as Apple’s iPhone gets bigger. In September Apple introduced new iPhone models with displays that rival the size of Samsung’s Galaxy. Then again, Samsung is being squeezed from all sides as hardware makers like Xiaomi and Lenovo sell more lower-cost devices in China, the world’s largest market for smartphones. All that competition is forcing Samsung to lower prices and spend more on marketing —Quartz
Yes, Samsung smartphones are still billion with a “b” profitable, but those profits are falling and have been falling, fast, for three quarters straight. Further, Quartz takeaway analysis is spot on because Samsung smartphones ARE between an Apple iPhone rock and Xiaomi hard place.
That is, Apple dominates the high-end smartphone segment and Xiaomi is eating Samsung’s lunch in the all important Greater China market.
As the example of Nokia over the last five years shows, merely producing and selling high unit device volumes isn’t enough — profit is king, period.
That said, other than Google, Samsung is the only other company that consistently makes money on Android. If Samsung smartphones start losing money, what does that say about the future of Android…
What’s your take?