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Samsung and LG open 2016 very differently, but both predict gloomy mobile future

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Jessica Lee Star/Digital Trends

Samsung and LG’s smartphone divisions had very different openings to 2016, judging by their respective earnings reports, which were revealed at the end of April. However, despite the differences, both companies predict gloom for the near future in the smartphone industry.

It’ll be champagne all round at Samsung, after profit for the smartphone division took a 42 percent leap to 3.89 trillion won, or $3.41 billion over there same period in 2015 — cementing the Galaxy S7 and Galaxy S7 Edge as its most successful flagship smartphone launches for some time. The company’s confident the interest will continue, and expects more growth over the next few months.

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Over at LG Mobile Communications, if there’s any champagne coming out, it’ll be in plastic cups. The smartphone department talked about sales of 2.96 trillion won, or $2.46 billion, which represents a 15.5 percent drop over the same time in 2015. Unfortunately shipments also decreased by 12 percent over the opening period in 2015, and over the final three months of 2015 as well.

LG also launched a new smartphone earlier this year, the G5, which has an innovative but commercially risky modular construction. It appears not to have captured the public’s interest in the same way as the Galaxy S7, but this may change as more modular accessories, or LG Friends, are released. LG’s made it clear it’s playing the long game with the G5.

Mobile growth halts

However, the long game isn’t looking good, and Samsung and LG comment on the trials that lay ahead for mobile manufacturers. Samsung says it, “anticipates softening demand in the smartphone market and negative growth in the tablet market.” LG is similarly negative, saying, “Competition in the smartphone market will continue to increase, leading to further price erosion.”

Analytical firm IDC shows that during the first three months of 2016, the global smartphone market remained almost flat, and the tiny growth that did occur was the smallest it had ever recorded. Things are changing in the smartphone world. LG says it’s ready for combat, and will counter the downslide with “a strong global push for the G5 and new models such as the X series.” Samsung promises new mobile devices to come in the second half of 2016, new regions for Samsung Pay, and to further push the Galaxy S7.

Across all divisions, Samsung took 6.68 trillion won ($5.84 billion) in operating profit for the first three months of 2016, a year-on-year increase of 12 percent. LG Electronics as a whole saw a massive 65.5 percent year-on-year increase in operating profit to 505.2 billion won, or $420 million.