Samsung Faces Fierce Competition in the Smartphone Industry

Samsung earnings report beats expectations, but still shows a year over year decline in sales; expects further decline in coming quarter.

Samsung continues to face fierce competition in the smartphone industry as its profits continue to decline quarter over quarter. The South Korean electronics giant released its profit estimate — released today ahead of its full earnings later this month — and beat the 5.5 trillion won estimate compiled by Bloomberg.

Samsung estimates its operating profit for the 3 month quarter will be 5.9 trillion won ($5.4 billion US), which, while beating expectations, was still a 30 percent decline from the same period one year ago, with no change from the previous quarter. Samsung estimated that its quarterly sales fell about 12 percent year over year, to 47 trillion won ($43.2 billion US).

The company lost its worldwide smartphone sales crown to Apple fourth quarter of last year, after Apple sold a record breaking number of iPhone 6’s, which led to Samsung seeing a 36 percent decline in profits over the previous quarter. Perhaps this will change next quarter though, as Samsung hopes to turn things around with the sales of its Galaxy S6 and S6 Edge handsets, which feature a new metal-body instead of the plastic body Samsung has used in the past.

Samsung has relied heavily on the emerging markets, where they are able to sell large amounts of low end phones. However, recently, they have been squeezed out of these markets by vendors such as Xiaomi and Huawei. In the high end market, the company is facing stiff competition from Apple and other Android phone makers. Apple’s new large-screened iPhone 6 and 6 Plus directly compete with Samsung for the phablet and larger phone market, which they used to dominate.

Apple may be primarily responsible for Samsung’s recent loss of global smartphone market, according to a Gartner report that was released last month. For the final quarter of 2014, Apple laid claim to 20.4 percent of the worldwide smartphone sales, up from 17.8 percent during the same period in 2013. Samsung’s respective share plummeted to 19.9 percent in 2014, from 29.5 percent in 2013.

Prior to releasing earnings reports, Samsung had already hinted that they would beat the first quarter market expectations:

“There have been a lot of reports about earnings forecasts for Samsung Electronics,” Lee Joon, chief communications officer at Samsung Future Strategy Office, told reporters in Seoul on Wednesday. “It’s fair to say that we will report improved profits during the January-March period.”

Samsung shares were trading up 3.2 percent at 1.48 million won on Monday, ahead of the company’s guidance release.

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Daniel Heppner
Daniel Heppner
My big interests are photography, IT, and electronics. I like to get out the soldering iron and build things for my house that light up. I've traveled around the world taking pictures and consider the viewfinder an extension of my eyeball. I build computers for myself and friends for fun, and have experience with software programming. I have experience programming underwater robots for robotics competitions, as well as wiring up the circuitry for them.