SAMSUNG gets a harsh wakeup call from falling profits
After a marathon launch of devices, Samsung has announced reduction in number of smartphone models it will sell in 2015. This must be one sober decision the company has made considering how fast the year has been in terms of devices which has somehow worked against them having to keep up with their own trend.
This comes as a result of key device markets falling across continents. This is probably because rival companies have studied Samsung’s trend and customer needs through their releases to give consumers the same quality at budget-conscious prices. Samsung therefore recorded a fall of 74 per cent revenue in its mobile business from the previous year with operating profits also recording low.
Third quarter has also seen Samsung record 7 percent margins on smartphones down from 15 per cent in previous years. The move by the giant manufacturer will help improve efficiency in production as well as cut overall cost which will see its revenue recover.
Instead of launching 56 devices in a year’s span, the company is looking to cut portfolio by 30% at the same time Samsung will concentrate on mid-to-low models to balance economies of scale. Look at this; Samsung launched about 190 smartphones in a span of five years and Apple on the other hand only launched five devices in the same period.
Looking at the tablets, Samsung rolled out 27 new devices in 2014 only compared to only two Apple tablets. Samsung had honestly lost track on this one. The company has made the decision hoping not to alter market position but how sure they can be is currently not predictable.
Samsung currently runs the market with diverse gadgets catering for all financial and social classes. The firm intends on shifting focus from smartphones to core devices that could see the company raise above current percent margin.