AppleInsider Staff
South Korean electronics conglomerate Samsung has taken a sizable year-over-year profitability hit in its mobile phone division, with declining sales of high-volume, low-cost feature phones and tablets dragging down its bottom line.
Operating profit for Samsung's mobile business was just 2.74 trillion won ($2.6 billion), the company reported on Wednesday. That represents a steep decline from the 6.4 trillion won operating profit that segment posted in the year-ago quarter.
Partly to blame for the drop was a fall in the average selling price of Samsung's smartphones, as sales of mid-tier options like the Galaxy A improved, taking customers that may otherwise have chosen one of the flagship Galaxy S handsets.
Despite the grisly year-over-year numbers, Samsung's mobile business appears to be on the rebound after a rough 2014. Operating profit reached an all-time low last year, and the first-quarter numbers are actually up from the fourth quarter of 2014 thanks in part to the launch of the Galaxy S6 and S6 Edge.
Those new devices helped Samsung recapture the title of world's largest smartphone maker from Apple during the March quarter. Samsung shipped 83.2 million smartphones in that period, compared to 61.2 million for Apple.
Charles Martin
Malcolm Owen
Andrew O'Hara
William Gallagher
38 Comments
As Chinese buyers have gotten richer in general they're less attracted to the lower-cost phones. That segment is taking a hit there even with the Chinese manufacturers like Xiaomi Lenovo and ZTE, with Apple the beneficiary. China by itself accounts for the bulk of the lost revenue IMO. Doing business there is obviously a two-edged sword but since it has turned into the largest market, even out-performing the US, it's nigh-impossible to ignore.
The chaebol lives to fight another day.
nobody saw that coming....
Mass volume -/= success Most of those sales were cheep feature phones.. This article makes it sound like most of those sales were S6 and Edge phones.. they were hardly a fraction of at 84 million.. most of it's sales were the Galaxy A series, that they practically give away.
[quote name="sog35" url="/t/186062/samsung-profit-dips-as-feature-phone-tablet-sales-slide#post_2718220"]Total BS. Samsung's profits are not down because of less feature phone/tablet sales. They are getting smashed because they are selling less PREMIUM PHONES. [/quote] Market researchers would disagree with you. "The combined market share of Chinese brands fell to a two year low on a global basis, as growth in China slowed to single digit in the first quarter of 2015. Apple increased its market share in China, extending its lead over its Chinese rivals Xiaomi and Huawei. Major local vendors face the strongest headwinds in their home market since the smart phone boom began in 2011. Lenovo (including Motorola), Yulong and ZTE recorded their lowest shipment volume to the Chinese market for the last two years. “Consumers are losing their appetite for ultra-low-cost devices, as expectations increase in line with spending power and, combined with rising market saturation, this is resulting in a major shift to devices that provide better user experience,”