Samsung is currently experiencing a rather bi-polar market situation as of late. Despite releasing amazing hardware that has received rave reviews, the Korean OEM is also faced with the lingering, nagging (and perhaps now sagging) financial turmoil that sought to define most of 2014. According to a new report published by The Korea Herald, the company is now out of the top 10 when it comes to having the largest market capitalization in the IT industry. Specifically, it’s now sitting solid at spot thirteen due in part to sluggish sales of the Galaxy S6, and an unfavorable business outlook.
The Herald mentions that Samsung “had remained in the top 10 IT companies since 2005, but it was left out of the league this year as investors found its shares less attractive amid the toughening competition with Apple’s iPhone and cheaper Chinese handsets.” Back in 2012, it was standing strong at spot number six with a market cap in excess of $200 billion, however it dropped to seventh place in 2013 and further to ninth last year according to the Korean Information Society Development Institute. Samsung remains the country’s most valuable company and the world’s largest handset manufacturer.
Say it ain’t so
Some might argue that the Samsung of 2015 is facing an identity crisis of sorts. Long since the established, perennial Android OEM, it has been harshly criticized by the press year-on-year for its liberal use of “cheap” plastics in smartphone design. This same design is also what allowed its products to feature creature comforts such as microSD support and a removable battery. These two features were scrapped this year in favor of a total brand makeover that has seen the company up its game considerably.
The Galaxy S6 Edge+ is a stunning piece of hardware, but unlikely to be the panacea for Samsung’s financial woes.
Releasing not one, but two Galaxy S6 flagships this year, and this past month two flagship phablets, many of the more vocal critics have been quick to criticize the deliberate decision to remove so many cherished elements, the most recent being IR support.
Meanwhile, Samsung has been releasing a scattering of tablets, none of which might be classified as “premium” despite the new Galaxy Tab S2 series commanding a price that would suggest otherwise. In addition, there have been dozens of lesser smartphone variants released, with new reports indicating that the low-end Galaxy J series may even be cloned (spec-wise) and resold as the Galaxy O/Galaxy On in coming months.
Future prospects
With IFA just about to begin this week and Samsung’s already having let the cat out of the bag weeks early, there is an air of confusion as to just what -if any- products the OEM will unveil. The circular Gear S2, previously referred to as the Orbis/Gear A, has already been teased and confirmed, however smartwatch interest – and in fact wearables on the whole – is significantly down from last year. There is the possibility of a Galaxy Tab Edge, however no real leaks have sprung in past months, nor are tablets selling well these days.
While there is a chance something big could be unveiled, it’s probably safer to assume IFA will bring little more than the Gear S2 and the recently released Galaxy Note 5 and Galaxy S6 Edge+. The former of the two, in particular, is not being released in Europe this year and will most certainly affect sales of the device, of which The Korean Herald mentioned has received “disappointing feedback, dashing hopes for a recovery in its earnings.”
Outlook
Samsung has arguably released the best products in its entire mobile history this year, yet still the profit picture remains unfavorable. Realistically speaking there is only so much that can be done above and beyond what the OEM is currently doing, and thus the true panacea may require a good, hard look in the mirror. Samsung may very well have to accept the reality that its smartphone success has peaked and the future will only result in a protracted decline.
The Tab S2 (right) may ultimately fail to thrive due to its irregular screen size and high price point.
While it may be difficult to increase handset sales among fierce competition brought by Chinese and Indian rivals, there are still ways to increase profits as a factor of cost-cutting. Samsung continues to spend untold amounts of financial resources on aggressive marketing campaigns, and continues to release devices that are several magnitudes more expensive than others on the market, despite often having lower specs or lesser hardware. It could also release new, unprecedented products like a Galaxy Note Mini to try and bolster sales and capitalize on untapped markets.
We would love to hear your thoughts on Samsung’s situation. Is the company truly cursed with a bleak outlook or can it do something to salvage its sagging situation?