Samsung easily ranks as the world’s leading manufacturer and seller of consumable electronics. This growth has been riding on an upward curve the last few years, mainly fueled by innovation and market ingenuity. The company has done quite some business in most nations of the world, unable to beat Apple only in a few developed countries, the US included. However, as the smartphone industry changes fast, Samsung must evolve to fit in, and that means considering cheaper smartphones to counter off competition from companies such as China’s Xiaomi.
Based on a market survey conducted by the Wall Street Journal, a Xiaomi smartphone that has comparable hardware to a Samsung device sells at nearly half the price. So the question lingers, ‘why would any cost-conscious company want to pick Samsung?’ Sammy has already lost its top position for mobile phone sales in Asian giant market India, and there are indications the same could happen in Philippines and Thailand. Although the electronics giant still persists as the world’s number one smartphone maker, it’s consistently been losing market share in the last few quarters.
The company gets 18% of its total sales from China. More than half of this revenue can be attributed to mobile phone sales. But considering the changes in the market, and the rise of low-cost, quality smartphone manufacturers such as Xiaomi, Samsung is flying in consultants and executives to assess the market problem and come up with a solution. As part of its preliminary survival measures, for the Chinese market, the company is deflating prices for existing devices by up to 20 percent. There are also plans to roll out cheaper devices for emerging markets.
These steps are just a few in many geared towards shoring up the company’s mobile-phone division, which makes about 60% of its operating profit.