Samsung Slashes Prices to Stem Market Share Loss

Following a fifth straight quarter of losses coupled with being the only company amongst the top five smartphone makers to lose market share last quarter, Samsung Electronics has slashed prices on its flagship phones.

Looking to step up their battle against Apple, as well as fast-growing Chinese rivals eating away at their once double-digit position in emerging markets, the company is cutting prices by $100 or more, depending on the market.

“The price has been adjusted since a certain period of time has passed since the global launch of the Galaxy S6 lineup, and it is not only confined to the Chinese market,” a company official said.


 

“Some still seem to think that a well-made product will sell well, but the Galaxy S6 showed that assumption is wrong.”

In China, where the competition has grown increasingly tight with the rise of Chinese brands Xiaomi and Huawei, Samsung has cut prices on their 32-gigabyte Galaxy S6 and the curved by 800 yuan (US$128). In North American and European markets, the price will come down by around $100, the company said.

American carrier T-Mobile announced a whopping $200 price drop for the 128 GB models of both of Samsung’s flagship phones.

The price slashing amounts to a bit of an embarrassment for the world’s No. 1 smartphone maker considering it comes only four months after the official release of the two flagship models that it pledged would go head-to-head with Apple in the premium market only to fail. This while the low end market continues to be eaten away by competitor brands.


 

The company has seen a decline in profit over the past five quarters, most recently posting a 38 percent on-year drop for the mobile division in the second quarter, with overall net profit dropping 8 percent from the previous year.

Samsung Global Market Share 2015

Data compiled by Statista

Samsung remained the world’s top seller with 21.3 percent market share. After holding a double-digit share in China, the company has seen that drop to 9 percent at the end of June.

Samsung’s position is similar to that of 2014, where an underperforming flagship from the mobile division drags the rest of an otherwise well-performing company down.

The reason the Galaxy S6 has not sold as strongly as hoped is partially due to supply issues and manufacturing problems with the S6 Edge version. Even though the S6 Edge has consumer demand, it’s not always available when the consumer decides to go an buy it.

Samsung’s position is similar to that of 2014, where an underperforming flagship from the mobile division drags the rest of an otherwise well-performing company down.

Share prices were down 3.8 percent to 1,115,000 won on the Seoul bourse Thursday –the lowest since Oct. 29, 2014.

Better isn’t always best

One lesson Samsung might take away is that a re-evaluation of brand strategy is in order. With the Galaxy 6, the company took a shot at positioning itself as a premium phone on par with Apple’s iPhone –a strategy that failed– while at the same time leaving them exposed on the lower end to rising Chinese brands.

One columnist writing in Forbes even portrayed it as Samsung “using Apple to beat Apple.” That plan didn’t work.

While it’s only months into the task, going to head with one of the world’s most well-branded names is a daunting, if not dangerous, task.

“Some still seem to think that a well-made product will sell well, but the Galaxy S6 showed that assumption is wrong,” said IBK Securities analyst Lee Seung-woo to Reuters.

Lee predicts that Samsung’s mobile division margins will drop down to 9.3 percent this year, which would mark the lowest point since 2012 when the first Galaxy S was released.

Android Market Share China


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