Samsung mobile division revenues fell in the first quarter. Moreover, Sammy’s share of the smartphone market fell for the first time in four years. The end is near? Not likely, but these data points highlight just how competitive the smartphone market is.
They also highlight how precarious Samsung’s position is. For example, while Samsung manufacturers everything from ships and construction equipment to televisions and, yes, smartphones, more than three-quarters of the company’s profits come from mobile.
“Samsung’s heavy reliance on mobile is rising, posing persistent concern to the market,” said Oh Sang Woo, analyst, Leading Investment & Securities. “The bigger-screen smartphone market is what Samsung pioneered and it enjoyed leadership in that segment, but the company now has to share that pie.”
Well, “share” probably isn’t the word. Chinese competitors, like Xiaomi and Huawei, are gobbling up market share at the low-end and Samsung has been losing out to Apple’s smaller iPhone series at the high end. Further, it is widely believed Apple will ship a five-inch, give or take, iPhone later this year.
Samsung has done little to help its own cause. The Galaxy S5 launched recently and no one expects this lackluster sequel to a sequel to take share from anyone — it’s a boring, ho-hum product, which is actually more expensive than an iPhone.
“Samsung continues to face tough competition from Apple at the higher-end of the smartphone market and from Chinese brands like Huawei at the lower-end,” Neil Mawston, executive director, Strategy Analytics.
Samsung: Better in the Middle
Again, no reasonable person would suggest Samsung is in mortal danger. Nevertheless, the world’s biggest smartphone maker is definitely in a tough spot, wedged between Apple at the high-end and a swarm of small Chinese makers at the bottom.
Can Samsung make comfortable living in the middle of the mobile market? Or, does the company need to fundamentally need to rethink its strategy?
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