Despite being the top Smartphone company Samsung is losing profit
If you look for the top smartphone companies, Samsung will be at the first position. It has even displaced Apple, but being at the top is not really helping Samsung to increase the profit. The company estimated yesterday that its operating profit in the second quarter was around 24.5% less over the same period last year. Samsung’s growth in the recent years has been driven mainly by its mobile phones. The success of its Galaxy range, along with a growing global demand for this type of device caused the displacement of Nokia as the largest manufacturer of mobile phones.
Lee Seung-woo, technology analyst at IBK Securities, told Reuters, “the benefits [of South Korea] show the harsh reality that Samsung is not Apple, but Samsung.” His strategy of selling expensive phones at prices no longer works because their Chinese rivals also offer the same kind of devices (even better) at the cheapest price.
Chinese companies, like Xiaomi and Oppo are releasing amazing devices at cheaper price. Xiaomi’s sales are increasing like anything, and boosted its sales to 267% (approx) which is not a joke. If a company offers you a device with the same feature and hardware configuration at 5-6 times more cheaper rate than other company, why will you pay more? I won’t and I hope nobody will like to do. Motorola has also released the devices with great technical specs at cheaper price, like Moto E and Moto G.
Samsung has also spent a lot to promote their low-end and mid-range phones, because the sales of those phones have decreased. The company also said about the main reason of decreasing the profit that is not related to its smartphones manufacturing, but the exchange rate. The value of the currency “Won” is increasing constantly against USD and other currencies that also causes loss. This can be a great reason of the loss of any company.