With the mobile phone market being one of the most competitive industries in the world, is the Samsung mobile product-range shrinking in order to compete with other smartphone manufacturers?
The bad news is that profit from Samsung Mobile’s smartphones have been on the decline. This leads credence to the suggestion that Samsung may be a giant on the path to destruction, hoping for a buyout that could pass regular scrutiny.
However, we are optimistic in the fact that with the report of shipment growth, Samsung Mobile can utilize other features within their phones to monetize their audience. After all, there is more than one way to make a dollar.
Samsung focusing on lower to mid-tiered mobile product range?
Although Samsung Electronics reported a shipment growth, they also cited a reduction in profits due to the S6 price adjustment. Samsung is reportedly selling more units, but reaping smaller profit due to increased sales in their lower to mid-tiered products. This means that Samsung is having problems competing in the higher tier market, which drives much more profitability per unit.
As we mentioned earlier, there is more than one way to make a dollar and Samsung is diversifying their offerings.
They have reported making more money due to having more overseas carriers and the LTE network expansion. So while Samsung’s average selling price is declining (due to selling more lower to mid end tiered products), they are shipping more products than ever and monetizing their brand in as many ways as possible.
Samsung’s mobile product range may be shrinking, but they continue to diversify and expand their other product ranges
Samsung has not only expanded overseas, but they are offering other products such as music players and tablets comparable to Apple products in an effort to remain competitive across the board. While Samsung’s mobile product range may be shrinking towards lower to mid end tiered products, they are still expecting their smartphone and tablet sales to grow.
Another important note about Samsung’s profitability is that 63% of their profit was reported from their Device Solutions group. This is the group responsible for its huge display of component and semiconductor sales. The irony is that Apple is a major customer of the Device Solutions group, but it is a direct competitor to Samsung Mobile. This shows how companies can work together in different industries while simultaneously competing within others and actually make it work for both of them.
Looking back a little more than two years ago, Samsung Mobile was the most profitable aspect of Samsung Electronics. Fast forward two years later and now sixty-eight-percent of their profit comes from a group that Apple is a major customer of.
So, is the Samsung Mobile product range shrinking?
Competition in the higher tier mobile market from Apple and extreme competition in the lower-end market from China, may well lead to Samsung’s mobile product range shrinking. Samsung is not going anywhere soon though, so no need to get worked-up. Their business is just adapting to the demands.