How Samsung Can Survive a Smartphone Profit Slowdown

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Since Samsung's Galaxy S4 sales have slowed down, we can expect Samsung's profit to slow down, too, this year. But that doesn't mean Samsung will be hurt in a meaningful way. In fact, Samsung is already thinking about other methods to increase its profits, such as focusing more on the supply side of their business "to drive earnings at a time when smartphone profits appear to be hitting a plateau."

The advantage Samsung has over most other OEM's is that they make a lot of the components they put in the phones themselves, while the rest have to outsource them, which means they end up paying a premium on those components, and their profits shrink, since they still have to compete against Samsung and others with their retail price.

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Samsung is the leader in mobile flash memory, the leader in mobile DRAM, and also the leader in OLED displays, although that counts a little less, since there are now very competitive IPS panels, and OLED panels tend to be more expensive at the same resolution compared to IPS LCD's, too, so most smartphone OEM's pick IPS panels anyway.

Sony might become more aggressive with their displays soon, once they start to put quantum dots panels on their smartphones. Quantum dots displays should have a much larger color gamut, or at least it supposed to have 2 years ago compared to the IPS panels of the day, but IPS displays have improved a lot since then, too. Either way, the competition is heating up in the display market, and Samsung definitely can't rest on its laurels with their Super AMOLED technology.

One market I don't think Samsung has exploited to the fullest yet is the mobile processor market. Even though Samsung makes so many smartphones, they rarely use their own chips in their phones, with the exception of the Galaxy S flagship line, but even then they make a lot of them with Qualcomm's chips. Maybe they're just waiting to finish their own custom CPU core, before they use it in all of their phones, and to increase their business and profit, they could also sell them to others, and become more of a competitor to Qualcomm and Nvidia, who's also working on its own "Denver" CPU core.

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Even if Samsung loses its smartphone market domination in the future to Motorola or Sony, or someone else, they should still make a lot of money by selling all sorts of components to everyone in the industry.