Samsung has now posted five quarter of falling profits and their struggling mobile division is the main reason for this. In the results published earlier this week, Samsung posted a 64% drop in fourth quarter operating profits down to $1.8 billion. And this time in 2013, two third of the business profits came from the mobile division but for 2014, only one third of the profit was derived from the mobile division. The reasons for this drop have been well publicised but as a brief recap, Samsung are struggling against Apple’s smartphone and tablet portfolio on the premium side, especially now that Apple have invented the large screen device. Their business is also struggling to compete with comparable devices from a number of Chinese handset manufacturers, which significantly undercut Samsung’s prices.
Samsung’s recovery plans include reducing the portfolio of smartphone by between 25% to 33% and releasing a completely redesigned Galaxy S6 (due to be announced in early March). We’ve seen many rumors over the S6 and goes out may be made out of an all-glass design, or be a metal-plastic mix, rather than the traditional plastic designs Samsung is infamous for. We’ve also seen analysts’ forecasts that tell us Samsung will be using flexible screen technologies and new, advanced processors to justify a price premium to the competition. I’m not convinced that keeping the high price and adding even more gadgets is the answer to Samsung’s problems, but they will certainly start to turn things around. The business also expects a difficult 2015. In a statement,the company expect that most of its businesses to improve but will face significant headwinds, citing a number of different reasons including currency movements and the recession in Europe. Samsung expects smartphone competition to intensify even more, presumably as the Chinese manufacturers continue their expansion across the world.
I’m going to conclude my article with a glimmer of hope. There’s been much depressing news about Samsung in the last few months. They are most certainly not out for the count and I suspect that we’re going to continue to see horror stories for the coming months. The Galaxy S5 might be a revolutionary product from Samsung and it might sell very well, or it might be something of a disappointment. Either way, Samsung will buck up their ideas. If the S6 is a disappointment, I expect there to be a proper radical change at Samsung Mobile, rather than the half hearted attempts we’ve seen so far (the best example is the promise to reduce the number of Android lines sold, but we’re now up to four product families up from three). It might just take the iPhone to be the biggest selling smartphone in the world before Samsung sort themselves out. Brace yourselves, the best ever selling iPhone is coming.