Why Samsung faces stiff competition for low-end smartphones

Puneet Sikka
July 14, 2014

Why Samsung predicts its profits will fall in the 2nd quarter (Part 3 of 10)

(Continued from Part 2)

Samsung’s struggling to sell older models

In the previous part of this series, we discussed Samsung’s (SSNLF) position in the high-end smartphone market—especially in developed markets like the U.S. and Europe. Here, we’ll discuss Samsung’s current position in emerging markets like China and India—especially in the low-end smartphone market.

China and India are important markets for Samsung. They’re where future growth will come from. Let’s analyze the competitive threats Samsung faces in these markets.

Samsung lost some share in the worldwide smartphone market

According to a report from IDC and as the chart above shows, Samsung’s share in the worldwide smartphone market fell from 31.9% in Q1 2013 to 30.2% in Q1 2014. Apple (AAPL) also lost some share. Huawei and Lenovo (LNVGY), meanwhile, gained some share in this market.

Apple has done well in China in the past. During Apple’s March earnings report, the company mentioned that its partnership with China Mobile (CHL), coupled with a great response to the affordably priced iPhone 4S, helped it to an all-time quarterly record for iPhone sales in Greater China.

Lenovo is also a strong player in emerging markets. It acquired Motorola from Google (GOOGL) earlier this year to further increase its presence in emerging markets.

Smaller players are also getting aggressive in emerging markets

Local players have started to make an impact in emerging markets. Chinese local players like Huawei, Xiaomi, and Coolpad have become popular options for Chinese consumers.

In India, local players like Micromax, Lava, and Karbonn have also gained presence in the Indian smartphone market. According to a report from IDC, Micromax had 13% market share, with Nokia at 20% and Samsung at 38%, in the Indian smartphone market.

Continue to Part 4

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