Samsung forecasts 25 per cent profit as mobile competition increases

By Peter Gothard
08 Jul 2014 View Comments
Samsung Galaxy F with Android 4.4 Kitkat

Samsung has forecast a 25 per cent profit for its second-quarter (April-June) period in 2013, expecting just 7.2 trillion won (£4.2bn) compared with 9.5 trillion this time last year.

Analysts expected Samsung to come up with about eight trillion won for the quarter, but instead the firm is expecting its lowest second quarter since 2012.

Further reading

Sales have fallen by 10 per cent across the company, the core of whose income comes from its mobile phone devices – particularly the Galaxy series of premium-priced smartphones.

Samsung said it has faced a "slowdown in overall smartphone market growth" as well as seeing "increased competition in the Chinese and some European markets" this quarter. It has also stated that the Korean won has been weak against the US dollar.

Other complications, such as customer unwillingness – particularly in China – to buy 3G devices as they await the prevalence of 4G, and slow uptake of tablets by owners of 5in or 6in-screen smartphones have also been linked to the shortfall.

But the biggest threat to Samsung could be the increasing sales by Xiamoi, Lenovo, Huawei and ZTE in China. Startup Xiamoi in particular is doing a roaring trade in $100-$130 budget Android devices, its cheap Redmi smartphone the top-selling device in the country in April.

As Apple shoulders the iPhone 6 for launch, it remains to be seen if the golden era of the smartphone has indeed started to come to an end. Part of the goal of Google's Android was to use a free, portable and flexible OS to make smartphone technology ubiquitous, and Samsung's woes seem only natural in the face of a global spread that is putting a sub-£100 device into the hands of most.

Even Microsoft is ahead of the game here, its recent devices in the Nokia Lumia range weighing in at about £100 and sporting the new – vastly improved – Windows 8.1 environment.

Should Samsung stick to its guns and keep aiming for the top of the market, or endeavour to exist in a world of cheap, disposable, but still powerful, mobile devices?

Reader comments
blog comments powered by Disqus
Newsletters
Is it time to open Windows?

Computing believes that Microsoft will start offering Windows free of charge by 2017. Is this a good thing for the enterprise?

54 %
19 %
6 %
16 %
5 %