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Get Ready for Costlier Smartphones from Samsung, focuses on Higher Profit Margins

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Samsung is the largest smartphone manufacturer in the world and is also the most dominant player when coming to the Android devices. With the early adoption of Android, Samsung had seen a huge growth at the same time when Nokia and Blackberry failed with Symbian and Blackberry OS respectively. When the smartphone penetration is slowed down in China and the Chinese brands went on international expansion with low pricing strategy. Just like other smartphone brands, Samsung also faced fierce competition from Chinese which made the company think about their strategy over budget offerings.

Talking Indian market as example, Micromax had been on par with Samsung before to the entry of Chinese brands. Now in 2016, Samsung is still no.1 brand and Micromax also remained at the second position, but Micromax has lost most of its market share compared to Samsung. The strong brand image and the good service network made the Samsung withstand against the Chinse brands. Though all the high-end smartphone in Galaxy S series and Galaxy Note series are well received, but the declining sales of the budget and mid-range devices hurts the company’s market share and also profits.

From 2015, Samsung had revamped the entry-level smartphone line-up and announced the new Galaxy J and Galaxy On series. In China, the company also launched the new Galaxy C series devices that sports metal body and priced very competitively. Even the company brought the Super AMOLED display to the sub Rs. 7,000 devices with Tizen OS powered Samsung Z3. From now on the company might focus less on fancy features and go after the profits. The company wants to maintain its 400 million shipments every year but also mentioned that there will be promotions campaigns if necessary.

The Q1 profit margin of 15.8% is expected to reach 17% by the end of Q2 2016 with the new profit-driven strategy. This year, Samsung has the crossed the expectation with the huge success of Samsung Galaxy S7 & S7 Edge. Earlier this year, the company launched the S Bike mode on Galaxy J3 2016 and the My Galaxy app for deals and services. By the end of Q1 2016, Samsung is first in the list of the top smartphone manufacturers in the world with 27.8% while the Apple stood at second position with 14.4%. Even in the home turf of Apple, Samsung is chosen as the most trusted brand by millennials.

When coming to the most valuable brands in 2016, Samsung is dropped from second to the third position where the brand value has seen a slight increase from $81.7 Billion to $83.2 Billion. In the same time, Apple had seen a huge $16.5 Billion growth in its brand value. With the all these tasks, we can expect the Samsung smartphones to be not affordable as now. Even LG is also looking to follow the same footsteps as its homegrown rival, Samsung. It is planning to cut down the staff and wants to decrease the marketing budget.

The Galaxy Note 7 (a.k.a Galaxy Note 6) will be launched in the next couple for months while the company is also said to launch the 6-inch Galaxy A9 outside of China. Even the rumored Galaxy X with the bendable display will be available in the market sometime in 2017. With all these exciting launches, we expect Samsung to achieve its market share, but making profits will depend on sales of budget smartphones. Apart from Galaxy S7 and S7 Edge, the Galaxy J5 (2016) and Galaxy J7 (2016).

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