When Samsung announced its overall company financials a few weeks ago it revealed a slip in profits. The Korean giant said this was because of decreased demand in its mobile division and warned that specific numbers for its mobile hardware would not make for pretty reading (if you are a Samsung fan). That is indeed the case as the company released its mobile specific results for the third quarter today and profits have plummeted.
The mobile division of Samsung (which includes feature devices, smartphones, tablets, and wearables) slipped by a significant 31% over the last three months. Samsung has warned that this would be the case, and losing nearly a third off the company shows why executives within Samsung are genuinely concerned.
Profits fell dramatically from $6.28 billion this time last year to $4.32 billion in 2014, while many of the reasons presumed for the slip have been confirmed by Samsung. Chief among those is a rise of Chinese brands taking the fight to Samsung in its Southeast Asian homeland. The company’s market share has fallen dramatically as more affordable Chinese devices take hold, while in Western markets increased Android competition has also been problematical for the company. Samsung’s response to this will to keep doing what it always does, flood the market with devices, although there are signs that consumers are tiring of that tactic.
“We will respond more aggressively to meet demand in the Chinese market […] in the latter half of this year by introducing more products with better specification as well as better price competitiveness – Samsung Mobile’s SVP Kim Hyun-Joon.”
Another factor in the decrease has been the strength of the Korean Won, an issue for a company that makes most of its business from exports. It seems the mobile division has dragged Samsung’s entire holdings down as overall profit fell by 20% across the group, although the company plans for its smartphones to hit back.
Indeed, the company expects to record growth in terms of market share throughout the remainder of 2014, although Samsung did confess that profits were likely to continue to be uninspiring for the near future. We would even say the company’s hopes to retain and grow market share are also optimistic considering the fact that Samsung lost ground in almost every global market during the last three months.