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Samsung’s Bottom Line Shrinking Due to Cheap Knock-offs

July 9, 2014 - Written By Ryan Duncan

Samsung shared some disheartening news Monday night. Their earnings report was announced and not only was it bad, it was worse than anyone had expected. A lot worse.

Analysts were expecting 8 trillion won in operating income, but what they got was 7.2 trillion ($7.1 billion). These numbers equate to a 24% drop in year-over-year basis. Sales were also down 10% to 52 trillion won.

So, what’s the deal here? Has Samsung dropped the ball? Have they stopped making quality products that millions of people enjoy every day? The short answer is no. In fact, they may have actually done too good a job.

Remember back in the before Android had truly high visible OEMs, much less flagship devices that were easily recognizable? Apple does and that led to tons of “iPhony” knock off devices. The Cupertino company made the most identifiable smartphone in the world and, imitation being the most sincere form of flattery, small companies found that just making a phone that looks similar to such a popular device could turn into money for them.

Samsung’s Galaxy line of devices have reached that iconic level that was once reserved only for Apple’s phones. However, because Samsung eschews metal bodies and has stuck with their polycarbonate build, it is actually easier for these leeching companies to produce cheap facsimiles that largely resemble the real thing in only the outward appearances. And with the inherent openness of the Android OS, the inner workings of the phones can closely resemble even Samsung’s Touchwiz skin. Again, though, only in outward appearances.

The sad part is that fake outward appearances are good enough for a lot of people. Sure, the entire device is usually technologically two or three years old and none of the flagship features are included but hey, it sure looks like the real thing. From a distance. And through squinted eyes.

Samsung Galaxy phones are expensive, though, and a knock-off can go for a tenth of the price. Some Chinese companies produce absolutely nothing but cheap look-alike devices and there are many companies like them. Unfortunately, for a lot of people just the superficial look of an accessory is enough to make them feel validated. That’s just the tip of the iceberg on a whole ‘nother can of worms, though.

What do you guys think of cheap, look-alike devices? Do they have their place or are they detrimental to not just companies like Samsung, but the industry as a whole? Sound off!