Samsung has been the undisputed commander-in-chief in the smartphone arena for quite some time now. However, its position seemed to have been threatened in 2014 with increased competition in the smartphone market with striking forerunners from its rivals coupled to its tanking Galaxy S5 at its OEM in Korea. Samsung seems to have regained that ebbing glory at the break of 2015.
This year, Samsung has awakened with the new series of Galaxy S6 forerunners which are squarely seated in the top-notch smartphone market. This reawakening seems to have done the magic for Samsung as reported by Counterpoint Technology Market Research as it has shipped 84 million smartphones in the third quarter of this year, marking a 6.3% rise of its sales compared to last year as well as a landslide lead against its main rivals, Apple and Huawei, which are in second and third positions respectively.
While the increased sales might sound like amazing news, the joy could be short-lived because fact has it that the increase has not been fuelled by the Galaxy S6 flagship but by Samsung’s low-level phones. Counterpoint reported that while 55% of the sales at Samsung in 2014’s third quarter were priced from $301 upwards, this has reduced to 40% in 2015’s third quarter. Phones that were priced below $200 were the force behind the increased sales instead. They now contribute 38% of the total shipments as compared to last year’s 30% contribution.
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The key player in the decline of Samsung sales last year was the high prices tagged on its devices. Adding increased competition from smartphones of much lower costs from Chinese manufacturers like Huawei and Xiaomi made the perfect recipe that was slowly brewing, ready to send Samsung to its extinction.
This year, the advent of the Samsung Galaxy J series, quoting the Samsung Galaxy J5 in particular, seem to have been a big contributing factor to Samsung’s comeback with their low customer-friendly prices. This has shown beyond doubt that Samsung is not ready to lose its grip in the smartphone market just because of high inflexible prices and thirst for smart revenue.
The question as to whether this will work for Samsung or not remains to be witnessed. However, one can bet that the volume market may be a saviour for the company. During the days when Samsung ruled supreme in all splendour and majesty, its profits were flying at a range of 15% to 19%. During its fall last year, this had fallen remarkably to 7%.
Now that Samsung is rising from the capsizing boat and is ready to keep sailing on, it has promised its investors that the fallen figures are now going to rise up and go beyond 10%. This does not sound vague after all since the company’s margins have pulled up and were recording a 9% in this year’s third quarter.
Vending of cheap Samsung phones might not increase the margin as such but the fact of more Galaxy phones in more hands may be a booster to higher end sales, which might boost the margin eventually.
Samsung’s future, therefore, seems to be promising after all and the blow that came last year might just be a springboard for a big comeback.
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