The sky is falling — Samsung to revamp its smartphone strategy after poor earnings

By Williams Pelegrin October 30, 2014

Samsung Galaxy Note 4

Things have taken a turn for the worse for South Korean tech giant Samsung. The company announced that its earnings report from the past quarter was as bad as it predicted. Profit from smartphones is at its lowest point in three years, with operating profit down 60 percent and income sales down 20 percent from the same point last year, as reported by the Guardian. In other words, Samsung is spending more money and generating smaller revenues. This precarious situation has lead Samsung to rethink its smartphone strategy.

During an earnings conference call, Samsung’s head of investor relations Robert Yi said that the company was slow to react to market conditions and that its response came too little too late. In reaction to the changing the altered state of the market, Samsung senior vice president Kim Hyun-joon said the company will focus more on different price tiers instead of the high-end. Samsung may also reel back its smartphone ambitions and manufacture less devices each year.

“High-end smartphone sales result was somewhat weak,” said Hyun-joon. “We will fundamentally reform our product portfolio.”

Samsung’s new strategy runs in contrast to Sony’s renewed focus on high-end smartphones, following its decision to no longer compete with the likes of Chinese manufacturers, such as Xiaomi, in the entry-level space. Samsung’s sales in that market segment also suffered due to increased competition from Chinese and Indian smartphone manufacturers.

Also influencing Samsung’s focus on different price levels are its shipments, which fell 8 percent to 78.1 million smartphones during the third quarter. Samsung’s market share fell with it, going from 33 percent to 24 percent.

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Williams Pelegrin

Former Digital Trends Contributor

Williams is an avid New York Yankees fan, speaks Spanish, resides in Colorado, and has an affinity for Frosted Flakes. Send…

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