Let's try to solve the conundrum of Samsung's financial results
SAMSUNG'S latest round of financial results did not make great reading for the company.
Earnings dropped by eight per cent, but when it came to all things mobile they were down 38 per cent. The biggest reason for this has been the two very different problems the Korean firm has with its two flagship smartphones.
So both the Galaxy phones have done badly?
Yes and no. While the Galaxy S6 has failed to capture the imagination the way the company was hoping it would – with it’s dramatic re-design from the S5, with metal and glass taking prominence over plastic – the edge version, with its curved display on both sides of the screen, is selling faster than Samsung can make them.
But that’s a good problem to have, right?
Not really in this case. That curved display is the sticking point, because it’s harder to manufacture than normal flat glass, and as a result some customers are being left disappointed when it isn’t available. Ironically, when this does happen, consumers also appear to be skipping the S6 and opting for something else entirely.
This is also part of the strange conundrum Samsung finds itself in – people are now going elsewhere for their smartphones. Analysts have put a lot of the mobile numbers drop down to more users opting for the iPhone 6 and 6 Plus – the latter being the first phablet to come out of Cupertino.
But as well as pressure from the US, smaller manufacturers in China are squeezing Samsung too as the sort of specs and features found towards the bleeding edge of technology become more and more readily available.
Wow. So Samsung is in a bit of trouble then?
This is the paradox; they’re still part of the biggest operating system out there, Android, and Samsung phones are still the most popular in the world. Yet their earnings results don’t seem to reflect that.
Samsung is established as the market leader, but now others are catching up and it’s making them appear stagnant.
So what can Samsung do?
Well maybe they need to take a leaf out of the Apple book – something they’ve already done in design terms this year by ditching plastic in their frames and using metal and glass instead.
This time though it should be by following their pragmatism. For the last couple of years Apple and their fans have taken swipes at phablet-sized devices, saying they’re far too big to be practical. But Samsung were scoring success with them and eventually Tim Cook and co bit the bullet and gave us the 6 Plus.
It’s turned out to be a masterstroke, with the device, along with 6, breaking all iPhone sales records and shifting more than 70 million in its first quarter of sale.
From Samsung’s perspective, they need to take the popularity of the edge and run with it – make that the flagship device, and maybe even consider scrapping others to dedicate more production time to it so orders can be met.
Of course, none of this will fix itself overnight, but it would be a good place to start, which based on these results is exactly what Samsung is in need of.