Samsung Electronics Co. said it would reduce the number of smartphone models it offers next year; part of a move to cut costs to counter declining profit. Robert Yi, head of investor relations, said during a presentation in New York that the South Korean technology major would cut the number of models by about 25% to 30%. Yi also added that the company reported a near 50% plunge in third-quarter net profit following a 20% drop in the previous quarter.
Samsung’s flagship Galaxy S smartphone has suffered in the high-end market from the popularity of arch-rival Apple’s new iPhone 6, while its dominance of the middle- and low-end handset segment has been challenged by Chinese handset makers such as Huawei, Xiaomi and Lenovo.
Samsung said last month it would offer more attractive phones at lower prices, aiming to find cost savings by standardising the components used in different models. Samsung’s share of the global smartphone market has fallen from 35% a year ago to just fewer than 25%, according to Strategy Analytics. Its operating profit margins from the mobile business fell to 7 percent in the July-September period, down from above 15 percent for 10 consecutive quarters.
The Seoul-based company has for several years been pushing onto the market a huge array of smartphone models, in many cases variants of its popular handsets; though it now looks set to adopt a new approach.
Last week, Samsung made a deal with BlackBerry that will offer BlackBerry’s mobile security on Samsung’s Android-powered devices. BlackBerry and Samsung, the world’s No. 1 smartphone maker, will offer a “highly secure mobility solution” for Samsung’s Android devices starting in early 2015. Services will include malware protection and new encryption standards.
Samsung Electronics is also planning to expand its product line of flexible-display smartphones following the warm reception of the Galaxy Note Edge, which has a curved display that wraps around its side. The senior company executive Lee said that the company is planning to lower production costs of AMOLED, which is currently more expensive than LCD, to lure more customers. The South Korean tech giant recently released its Galaxy A series phone in China, intended to reclaim its lost market share.
Source – WSJ