Samsung Is In Turmoil!
If any company has the know how to make a flagship phone that is also a top seller it is Samsung. For the past few years they have been dominating the flagship smartphone market. They have done so with the Galaxy S family line starting with the very first Galaxy S. That smartphone showed the world what Android could do with premium hardware and paved the way to the first best selling model from Samsung, the Galaxy S2. Even with resolution lower than its competitors in the age of 720p HD screens it was still a best seller. Last year they achieved that best selling status as well with the then new Samsung Galaxy S4. In fact Samsung sold 16 million units of the device in mention within three months of its release. This year with the release of their new premium flagship; the Galaxy S5 they are hoping to at least achieve the same sales figure.
Have they done it? No, they have not. The Samsung Galaxy S5 was no doubt a performer. It had plenty of new features, which we thought was great and that many people would be attracted to those features. It turns out though that even those features could not propel the sales of the device. Released to the world late in March this year Samsung sold, worldwide only 12 million within three months of its release. This sort of performance was never heard of from a company like Samsung. They sold a staggering 40-percent less flagship devices as they would have predicted. Due to strong demand forecasts though they have prepared by making more Galaxy S5s than they have done for the Galaxy S4, they actually made at 20-percent with the anticipation of strong demands. That did not happen which means there is huge pile up of goods unsold in Samsung;’s own warehouse and its retailers. Samsung’s biggest market, China took one of the hardest hit in declining sales figures. Compared to the Galaxy S4, the Galaxy S5 sold 50-percent less within the first six months of its release. This is all around probably the worst performance of Samsung to date so far.
Of course there could be plenty of factors over here. One could be that the market has already saturated itself with so many smartphone that a new flagship is merely not needed anymore. Samsung actually released about 56 new smartphones into the market this year which could also potentially overwhelm paying customers. With that many phones in the line up as well it is an expected issue. The Galaxy S5 also was not much of an upgrade from a Galaxy S4 if you look at it. Same plastic body, same resolution, slightly bigger screen, and about the same size and features. The only upgrades noticeable was the new processor, waterproofing, and fingerprint sensor. That could be the reason why plenty of Galaxy S4 users do not see a point to upgrading their device with the latest and greatest. Competition could be in play also here. The Chinese market is a booming market with high potentials. Samsung is definitely not the only one to notice this. The Chinese themselves too have noted the boom and took advantage of the low operating costs in China itself to create their own brands to compete with the likes of Samsung. Xiaomi for example have competed in the price point bracket in the same market space with Samsung. Perhaps that is why Samsung lost so many of its customers.
So in these trying times, Samsung really needs to do some work. Their profits in the mobile sector has took a major slump as revealed recently. There is only one thing to do for Samsung; a restructuring. There has been rumours going around about Samsung replacing its co-CEO and president of the mobile division, J.K. Shin. Of course he is to be praised for the division’s quick rise to the top. But when sales slump together with profits he will always be the first person to be blamed. But the real question after that will be who will be replacing him in the first place. By now though J.K. Shin has already taken a major pay-cut in fact he was earning more than twice more last year from Samsung than this year. But that does not mean he is out of trouble. It looked like Samsung was preparing to move him elsewhere and replace him with B.K. Yoon, another one of Samsung’s co-CEO and president of televisions and home appliances department of Samsung. That could just mean greater integration between smartphones and home appliances, if he develops products side-by-side. It sounded possible. Of course with so many rumours of the major restructure it did not bode well for the internal workings of the company. Its employees starts to panic and lose focus on their jobs for fear of being cut from the company. Reports also suggests that Samsung’s staff takes more overtime work hours to complete work than before due to the panic caused by the rumours.
Of course, the final decision was that J.K. Shin will stay in place. Of course someone has to take the fall for the slumping sales of the Korean giant. That person would be D.J. Lee, Samsung Mobile’s head of sales and marketing. This shows quite a strong trust that co-CEO J.K. Shin would turn things around in Samsung’s Mobile division. Some reports also suggest that there could be further job cuts in the mobile division in the weeks to come which would not help with internal unrest. There are also talks about shrinking the mobile platform next year on. As in less devices to be released. That would also ensure that Samsung’s product stay as unique as possible in the market, helps with the premium pricing too with so many competitions around. Of course with the failure of the Galaxy S5 they would not want to repeat the same mistakes next year. That is why there are rumours of Samsung actually going back to a blank piece of drawing board for the up and coming Galaxy S6. We are really excited about that one actually and cannot wait to see what Samsung holds for us next year.