Samsung is forecasting a sharp dip in quarterly profit, noting “declines in the mobile business due to intensified smartphone competition”.
While the company said that smartphone shipments had increased “marginally”, it had seen its operating margin fall due to “marketing expenses related to aggressive promotions”.
Its device average selling price has also dropped, due to the reduced proportion of high-end device shipments coupled with price decreases for older models.
In order to counter this, it is preparing “new smartphone lineups featuring new materials and innovative designs”, as well as a new set of mid-to-low end smartphones with “strong competitive positioning on both hardware specifications and price”.
According to speculation, a mass-market device refresh is likely to take place sooner, rather than later.
Samsung is also likely to see something of a boost from the introduction of its latest flagship smartphone, the Note 4 phablet, which is becoming more widely available now.
But while the company has largely had the premium large-screen smartphone market to itself, the introduction of Apple’s iPhone 6 Plus has changed this – although the more mature Note line still has a number of differentiating points.
At the other end of the market, the company is coming under pressure in a number of key markets such as China and India from local players such as Xiaomi and Micromax. Throw in aggressive international plays from companies such as Huawei, ZTE and Lenovo, and Samsung’s challenges become even more apparent.
The company is anticipating a Q2 operating profit of KRW4.1 trillion ($3.84 billion), down 59.65 per cent year-on-year from KRW10.16 trillion, and down 42.98 per cent quarter-on-quarter from KRW7.19 trillion.
Revenue for the quarter is expected to be KRW47 trillion, down 20.45 per cent year-on-year from KRW59.08 trillion, and down 10.22 per cent quarter-on-quarter from KRW52.35 trillion.
The mobile slowdown has also impacted some of Samsung’s components activities.