Samsung’s profits down in the face of stronger smartphone competition

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Poor old Samsung. In the same week that Apple announced a whopping $13.2 billion profit, Samsung has had to tell the world that its profits are down by a fairly large 39%.

TechCrunch reported the story earlier today, saying “The South Korean company reported net profit of 4.63 trillion won (about $4.35 billion), a 39 percent drop from the 7.49 trillion won it reported a year ago. This fell below analysts’ expectations, as well as Samsung’s own forecast for operating profit of 5.9 trillion won. Revenue slipped 12 percent year-over-year to 47 trillion won.”

This is, TechCrunch says, in large part thanks to other smartphone makers doing a pretty good job of bringing out their own phones that perform and look nearly as good as Samsung’s do.  And in this day and age “nearly as good” but cheaper means a lot to consumers not interested in Apple’s offerings.

Samsung is confident that its latest phones, the Galaxy S6 and S6 Edge will help its profits recover as the company expands into India and China, however TechCrunch notes that the Korean electronics giant faces stiff competition in those regions from smaller phone makers like Xiaomi and Micromax.

Somewhat surprisingly, Samsung was also announced as being the world’s biggest smartphone maker yesterday by research firm Strategy Analytics (via Reuters). That is only by volume, though, meaning Samsung has shipped more smartphones than Apple has. Clearly, its profit margins are far lower than Apple’s average of 38.5% to 39.5%.

Don’t count Samsung out just yet, though: the company has other plans in place to boost profit margins, like spending less on marketing and focusing on other aspects of its operations like its semiconductor business that will apparently supply processors for Apple’s next iPhone.

[Sources – TechCrunch, Reuters, Image – CC BY-SA 3.0 via Wikimedia Commons]

Deon du Plessis

Deon du Plessis

Deon got his first taste of PC gaming at the tender age of 11 when his father bought an 8088 XT, ostensibly to "help him with his homework". Instead, it introduced him to Leisure Suit Larry, King Graham, Sonny Bonds and many more, and Deon has been a PC gamer and hardware enthusiast ever since. He landed his first professional writing gig in 2006 at a prestigious local PC magazine, a very happy happenstance as he got to write for a living about things he loves - tech, PCs, gaming, and everything in between. He's been writing about it all ever since, and loves every minute of it.