14 DAY TRIAL // Samsung’s profits have been falling for the last couple of quarters and the first decision the company made to prepare for the worse is to reduce the number of smartphone models it launches each year.
The South Korean company is one of the most prolific handset makers on the market, but its smartphones don’t appear to sell very well. That’s only in part Samsung’s fault, but mainly it’s due to the recent rise of Chinese OEMs like Xiaomi, Meizu, Gionee and Oppo and OnePlus, which are eating Samsung’s market share in the Mainland.
As soon as these companies go international, Samsung and other well-established brands will have a hard time maintaining the same market share and profits.
Anyway, Samsung seems to have a long-term plan in motion, which is meant to cut some of the losses the company recorded in terms of smartphone sales.
Well, the first thing Samsung will do for the next year is to launch a much lower number of smartphone models. According to Wall Street Journal, Robert Yi, Samsung’s head of investor relations, said during a presentation that his company will cut the number of smartphone models by about 25% to 30%.
The information has been confirmed by a Samsung spokesman soon afterwards, so there’s no doubt about it, we will see fewer smartphones being released under the South Korean brand next year.
As mentioned earlier, one of the reasons Samsung will launch fewer devices in 2015 is to cut costs to better compete with the Chinese handset makers, which come on the market with much cheaper devices but with almost similar specs.
Samsung is trying to cut costs and streamline its large smartphone portfolio
Furthermore, Samsung confirmed that it would “increase the number of components shared across mid- to low-end models,” which means that it will be able to “leverage economies of scale.”
It remains to be seen how the South Korean company will be able to tackle the low-cost Chinese smartphone makers like Xiaomi, Huawei and Meizu, next year.
Although by launching fewer smartphones Samsung will streamline its portfolio and will better manage all the inventory and supply chains, it will be hard to gain the lost market share in China and other key markets.
The next important step for Samsung is launching an innovative Galaxy S6 flagship smartphone, which is supposed to arrive sometime in spring 2015. If the Galaxy S6 won’t be as popular as the Galaxy S III, a comeback will be much harder for Samsung in the Asian markets.
