And the iPhone 6 isn't even out yet!
".......IBK Securities estimates Samsung’s smartphone shipments fell to 78m units, from 87.5m units in the first quarter. Worryingly, analysts reckon the weakening performance of the mobile unit could have a knock-on effect on other businesses given the company’s vertically integrated structure."
Galaxy 5 is not a really a improvement over the galaxy 4. with a cheaper built quality and lack of Samsungs 64 bit CPU it seems to be a step backwards.. . I tend to think this is the reason behind Samsung troubles. The GS5 is also accused of being a cheater in benchmarks. Might be that Samsung needed to offset the waterproofing costs, and by doing so they made the phone lower quality overall.
Doubt Android users are going swarm and switch to the Iphone, because of one less desirable Android phone. Samsung will be back on top soon enough once the GS6 is released with a 64 bit CPU and wraparound screen.
The early 2013 bill of materials for the S4 was $236 while the 2013 bill of materials for the S5 is $256, or a difference of $20 or so. The S5, however, appears to be collapsing at a faster rate than the S4 which went from 30+M units in 2Q2013 to 17+M units in 3Q2013 to 13+M units in 4Q2013 to 9+M units in 1Q2014. Unlike the S4, Samsung bundled the S5 with at least $600 in freebies which cost an x amount of promotional dollars which they can't cut to protect their margins.
If you look at the history of the previous market leaders (Motorola, Ericsson, Nokia), the fate of the flagship phone will often provide the earliest clues of a company's impending decline. I believe that is what we are starting to see with Samsung. Samsung's vertically integrated manufacturing and inherent cost advantage only insure that they will be able to drag it out for far longer than the previous market leaders.
Without an organic eco-system, Samsung's phone profits are going nowhere. Google, MSFT, Apple, all make money from eco-system - search, music, advertising, whatever - but not Samsung. Samsung's going to give it a try with Tizen, and that may keep Samsung going for a time, but phone manufacture is a low to NO margin commodity (except for Apple, among a market segment/demographic that will shrink, esp in terms of market share).
Samsung is going to have to pivot their tech business - Google, Apple, MSFT will eat their phone profits, Intel and other chip companies will eat their chip business. I think Samsung will expand into "Internet of things" products, integrating tech into washing machines, TVs, fridges - they can make money there.
The ROI on phones and chips won't be there for them.
Agree. I have a subscription to Office 365. It is cheap and gives me copies for all 5 members of my family, their machines and an additional 5 mobile devices. It also gives me a Onedrive cloud solution. In a few days my allowance for this will rise to one terabyte at no extra cost! And this will be the same for each of my family, 5 terabytes all together! I think this is an amazing deal and one which will likely make me and my family customers for life because I will put all my stuff into my terabyte. All my family photos, all my favourite music and vast numbers of other things. It's the way things are going. I don't know how Apple is going to compete. The only other one that can do this is Google in my opinion.
The HTC flagship phone(s) are creeping up on Sammy. The Galaxy line is stale and sales are reflecting that now.
Apple is poised to release TWO new sizes of the iPhone. The 4.7" screen we've been clamoring for, and a 5.5" phablet for the folks who want something extreme. Apple is taking aim at both the Galaxy s-series and the Galaxy Note series. Pent up demand for a new iPhone looks huge - bigger than ever!
Nokia peaked at 40+% market share of the global handset market in 2007. Samsung may have peaked at around 31+% market share of the global phone market last year.
Apple is going to remove a lot of high-margin oxygen from Samsung's high-end business with the larger screen iPhones later this year. We shall see how hard Samsung goes after the low-end to mid-range segment to make up in volume what it will lose in margins.
Samsung paid Nokia around $150-$200 million in royalties last year based on the expired 5-year deal which started in 2008. No, I don't think Samsung is going to pay $5-7 billion a year (36x) in royalties to Nokia. $1-$1.5 billion a year, maybe. Ericsson v Samsung involved some heavy cross-licensing between the 2 companies in wireless infrastructure but Samsung is still paying Ericsson somewhere between $300-$350 million a year in royalties for the next 5 years.