Samsung’s much-hyped Galaxy S5 smartphone failed to meet company’s expectations, selling 40 percent lower than expected.
According to reports coming from the Wall Street Journal, Samsung managed to sell just 12 million Galaxy S5 units in its first three months of the launch, around 40 percent fewer than projected and roughly 4 million less than its predecessor, Galaxy S4, which sold 16 million units in its first three months of launch last year.
The report noted that Galaxy S5 sales were down by about 50 percent in China, claimed to be as Samsung’s second-largest market by revenue, while the US market was the only “major market” where the smartphone maker sold more Galaxy S5 smartphones than it did the S4.
Samsung is said to have overestimated demand for the Galaxy S5, leading to an increased spending on advertising to help move units which are piled up in its warehouses.
The report also suggest that the smartphone maker could soon go for a top management reshuffle, with JK Shin, President of mobile communications and currently one of three co-CEOs, losing his co-CEO position. As per the expected changes, BK Yoon, another co-CEO who currently serves as chief executive of the company’s home appliances and television operations, may replace Shin as head of the mobile division.
Recently, the South Korean handset maker announced it will cut the number of smartphone models it offers by 25 percent to 30 percent beginning next year, as with having fewer models to focus on; the company will be able to streamline costs, which as a result would increase its profitability.
According to Strategy Analytics, Samsung’s global smartphone market share fell to 24.7 per cent in the third quarter from 35 per cent a year earlier. The company’s operating profit margins from the mobile business dropped down to 7 per cent in the July-September period, from above 15 percent recorded in the last ten consecutive quarters.
Smartphones just don’t have the kick they used to. People would pay full price for a smart phone a few years ago because of all the improvements in speed and features. But anymore they release a new phone every year that is a little bigger/faster. All phone companies have fallen into this yearly cycle. Apple has sidetracked it a little bit with the heavy marketing they did in the early 2000’s to create a sense of social status by owning their product. But even they haven’t innovated anything really exciting in the past few iPhone iterations. Most people just wait for their contract to be up to upgrade to a new phone. Some live for that gotta have the best now mentality. But it is instant gratification and is forgotten after a few months as they wait for next year.