Analysis: Will Samsung fade away from the smartphone market, just like Nokia did?

Samsung on the other hand, cannot release online exclusive devices. They have a very wide offline retail distribution system. If Samsung makes a device with good specifications as online exclusive, various offline retailers would lose sales and might completely stop dealing with Samsung. E-commerce has had a great start in India, but its still no match for conventional brick and mortar stores.

So, what can Samsung do to improve themselves?

1.  Improve specifications of entry-level smartphones

Samsung must definitely consider improving their specs in the less than 10k segment. If the Samsung Galaxy S Duos 2 is equipped with a more modern quad-core Snapdragon processor, 1GB of RAM, and a bigger battery (say 1700-1800 mAh), it can easily help Samsung fight with the likes of Moto E, Moto G, and Android One smartphones. If they provide better specifications at a lower price, they would lose margins but the developing countries are too important when the market reach is considered.

HTC tried to focus on the higher mid-range and the high-end segment when they were in a good position but their revenues started falling since 2011. Samsung saw the opportunity, and were an instant hit in lower-end and lower mid-range segment. As evident from the data, all the lower-end models were from Samsung. Devices like Samsung Galaxy S Duos 3 will not break the ice, especially in developing countries like China and India. Samsung should learn from HTC’s mistake, not repeat it. The only solution is to provide better specifications, which can compete with the offerings of from other vendors such as Asus, Xiaomi, Micromax, etc.

Samsung’s latest offering, the Galaxy S Duos 3 leaves a lot to be desired, especially when compared to offerings like Android One and Xiaomi Redmi 1S. Smartphones like Moto G run on stock Android and have better specs than Samsung smartphones in the same price, so there’s no doubt that they end up providing a much better experience than Samsung devices. The Android One initiative lets users be on the latest version of Android whereas entry-level Samsung smartphones are rarely updated to the latest version of Android.

2.  Streamline their product line-up

Samsung has to streamline their product line-up. Sometimes, even technology enthusiasts like us get confused with their product names. They have admitted at their recent earnings calls that they had “unsold stock left in inventory which forced them to reduce prices and spend more on marketing”. When Samsung releases so many products not all the devices get the same love and attention. If you have a look at Xiaomi, Motorola, or Asus, you can clearly see how well-defined their product line-up is. They need to have clear price and feature differentiation between their products, something which is not present as of now.

Will Samsung fade away from the smartphone market?

Samsung is a big company and is not going to go anywhere soon. Despite a 60% drop in profits they are still the most profitable Android manufacturer in the world. Samsung is not the only Android manufacturer facing trouble. Even Sony has quadrupled their losses because of the poor performance of their smartphone division. HTC has been reporting lower revenues but looks like they are back on track, thanks to renewed focus on mid-range smartphones. Companies like Xiaomi and Motorola grabbing market share from Samsung are not able to make much money out of it either. From a long-term perspective, all these loss making (or minimal profit making) companies would not survive without increase in prices. This is already visible with the sale of Nokia, Motorola and Pantech. A sweet balance needs to be present between margins and the specifications.

Samsung is a huge conglomerate, with investments in various businesses such as electronic component manufacturing, home appliances, imaging, electronic device, etc. Samsung has been investing heavily in the chip manufacturing plants. If you know, Samsung is the biggest supplier for many companies, including Apple. Samsung will not go out of business, at least in the recent future.

Samsung is slightly improving their high-end devices. The Galaxy Alpha, and the Galaxy Note 4 come with solid specifications and metal build. They are also working on metal-bodied mid-range smartphones; Galaxy A3, Galaxy A5, and Galaxy A7. As the industry moves on, competition would reduce and pricing power would eventually come back to Samsung. Till then, Samsung needs to compete with other players, even if its profits decline. The emerging markets are good for showing the numbers and the scale while focusing on high-end smartphones for developed markets will bring profits.