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Samsung Feeling the Heat From the Chinese Manufacturers

May 21, 2014 - Written By Joshua Koh

It would seem that Samsung’s dominance over the smartphone market is being threatened by the likes of Xiaomi, Lenovo, OnePlus a la the Chinese manufacturers. The fact that these Chinese manufacturers are able to design better looking devices with excellent hardware specifications at a significantly lower price, is probably what is eating away at Samsung’s market share. Samsung’s share of the market has dropped from 32.4% to 31.2% in the first quarter of 2014. As 70% of Samsung’s profit comes from mobile devices, this isn’t a trend it wants to continue as it signals that Samsung isn’t exactly at the top of its game.

Some complaints about the Samsung’s flagship device, the Galaxy S5, are repetitive design, plasticky cheap build and semi functional features such as the fingerprint scanner security issue and inaccurate heartbeat monitor. To this end, Samsung’s J.K. Shin has stepped out and announced that the S5 sales has already surpassed that of its predecessor, the Galaxy S4 and that the S5 features though not revolutionary, are practical. Enter the LG G3 which has better specifications overall and in which Samsung feels is such a credible threat, that a countermeasure, the S5 Prime has to take the G3 on. This seems to imply, that Samsung is bowing down to pressure over the issues that the S5 and its predecessors have and are waking up to the idea that simply relying on brand loyalty to continue to dominate isn’t enough. Devices such as the OnePlus One and Xiaomi Mi3 also have less bloatware running on the devices which gives consumers another reason to avoid Samsung, if they do not wish to deal with Touchwiz and the apps that Samsung feels are necessary to utilize a Samsung smartphone.

Another possible factor, is the manner in which Samsung does its advertising versus that of its smaller Chinese counterparts. Though Samsung possesses a larger budget and is able to push out advertisements on different platforms such as TV, radio etc, the strategy that the Chinese manufacturers seem to favor, is that of guerilla marketing. The idea is to create a unique experience to users by utilizing advertising unlike conventional adverts by the likes of Samsung or Apple. OnePlus’ Smash the Past is one such idea, which works by offering a OnePlus device for $1 if you smash your current device. Admittedly the quality control wasn’t exactly up to snuff, but still it creates an experience and hype that cannot be garnered through the normal means.

Pricing is something that the Chinese manufacturers seem to have a better understanding on versus that of Samsung’s idea that based on its branding, price can be set in whatever manner it sees fit, regardless of the overall design, specifications or software. This holds especially true for developing markets, in which pricing rather than branding is what enables sales. As for those of us aka the geeks in the more developed market, pricing matters if there isn’t any ‘wow’ factor.

The rise of the Chinese manufacturers could be the impetus that stimulates innovation of the mobile industry and teach the more established players such as Samsung or Apple a thing or two about the sweet spot between price and form. Simply focusing on one or the other simply isn’t good enough in the saturated mobile arena, where there are simply so many choices that having an established brand or reputation is insufficient.  More thought and effort has to be placed in marrying the two together so as to meet the expectations of us consumers.