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No more flashy features, no more price wars: From now on, Samsung is all about profits

By Williams Pelegrin June 22, 2016

Samsung Galaxy s7 Active — Jessica Star Lee/Digital Trends

Samsung may have opened 2016 with several bottles of champagne, thanks to a strong first quarter bolstered by the Galaxy S7 and Galaxy S7 Edge, but as one of the world’s top phone makers, the South Korean wants to keep popping bottles and maintain its place. As such, according to an unnamed Samsung executive, the company will try to do just that by emphasizing profits over all else, reported the Korea Times.

According to the executive, Samsung will adopt a new business strategy that will put a stronger emphasis on profit margins instead of market share expansion. As such, even though Samsung will keep the idea of marketing campaigns on the table, it will not do so with incentives and promotions that require large amounts of cash.

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“Samsung will keep the company-set share according to markets. We will launch promotional campaigns if we have to,” said the executive, who spoke on terms of anonymity. “But the company will be unlikely to initiate cash-intensive promotions to clear inventory and increase market share.”

Samsung’s reasoning for this shift in business strategy, said the executive, originated from the large number of Chinese budget phone makers competing with each other, as well as the lukewarm response customers gave toward “fancy features” their phones might implement.

Furthermore, Samsung will reportedly lower the number of budget phones it makes, and will decline to aggressively price its phones in response to competitors’ efforts. Thanks to these cost-cutting efforts, Samsung’s profit margin is expected to increase to up to 17 percent during the second quarter. This is compared to the 15.8 percent profit margin the company saw during the first quarter.

As for how its phone division will fare, the Samsung executive said the new business strategy will not affect it too much, since excluding every software and hardware feature under the sun would be balanced by the company’s portfolio and overall business savvy. Investors have reportedly been told of the change, and Digital Trends reached out to Samsung for comment on the matter.

If the new business strategy is real, it would be met with relief by those who believe Samsung releases too many phones on a yearly basis. After all, as we approach the end of June, Samsung already released a total of 17 phones, with half of the year still to go. Minimizing Samsung’s mobile portfolio will, in theory, allow Samsung to not split its resources as much.

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