Falling Sales Lead Samsung to Decrease its Smartphone Portfolio By 25-30 Percent
Things haven’t been great for Samsung lately. The company’s phones are being berated for their generic designs and offering low specs at high price. It is also facing a profit margin that is lower than before it unveiled the Galaxy line of phones. Looking at the numbers, it can be said that the company is going on a reinvention drive.
It was reported just a few days back that the company was launching ‘Project Zero’ to reinvent its next flagship from scratch. This model will be an inspiration that can be later carried down the food chain. But apart from creating a new product, the South Korean giant will shelve as much as a quarter of its devices.
Head of Investor Relations Robert Yi has said that the cuts in the portfolio can be up to 25 to 30 percent. Presently, Samsung’s margins from its mobile and information technology business squeezed to just 7% in the third quarter that ended September. It is at the lowest level since the end of 2008, before it launched its first Galaxy smartphone. This should be worrisome as the mobile business has almost become the face of the company, and a loss would severely affect the company’s perception in the eyes of its consumers.
Samsung is also getting beat by brands like Xiaomi, Motorola and local brands who are rapidly clearing the dominance of Samsung devices in the market. The company got a massive jolt this year when it dropped to second spot in India and China. This must have finally led the company to see the light and create a new strategy.
It’s not sure as of yet as to what devices will get the boot but considering the massive stock of the Grands and Primes and Autobots and Decepticons, there is a scope for decreasing the number of devices in the portfolio. The company is also targeting the mid and lower segment of the market where the maximum volume of the sales takes place.
Samsung has the potential and resources for beating Xiaomi at its own game. It even has enough financial cushioning to take some unwanted hits. So, it would be advisable to Samsung to take on some more serious risks and give the consumers an offering that will actually be aspirational.