Samsung had a very interesting strategy of selling phones, and granted, that strategy worked wonders for them until recently when it started hitting a few bumps. I guess you can pretty much compare their tactic to the spread of a shotgun bullet, trying to cover as many markets as possible in all areas – low, mid and high range smartphones alike. Until recently, this strategy was flawless, allowing Samsung to corner and dominate most scenes – especially the low and mid range phones – but now it would appear that this strategy has yielded lower profits than last year.
Between Q2 of 2013 and Q2 of 2014, two regions seem to have caused a bit of trouble for the Korean giant – Europe and China. Interest in the products released by Samsung seems to have dropped considerably in these two areas. Samsung’s tablet sales also seem to have suffered. If you couple it with the fact that they completely lost the low-end market in China to Xiaomi, it’s not a good thing for Samsung.
Samsung also reportedly has a surplus of mid-ranged phones and entry-level devices, regions in which the company used to break all barriers and smash all records. As a result to these factors preset, Samsung was forced to up its spending in marketing for these devices, action that almost that adversely affected the bottom line of Samsung’s Q2.
The Korean manufacturer projects that they will earn 51.5 billion dollars in revenue and 7.1 billion in operating profit in Q2 once the official report rolls in. While these are all great numbers, they still aren’t up to snuff compared to last year’s reports. They do count on having a better third quarter, though:
“Samsung cautiously expects a more positive outlook in the third quarter with the coming release of its new smartphone lineup.”