Samsung profits drop as flagship Galaxy S5 fails to deliver
Samsung’s message as the company released its quarterly earning reports was that the market demand for phones has become weaker and they’ve had to increase their marketing spend which could have severe repercussions to the company as a whole.
Samsung posted a profit of $6.1 billion, down from $6.96 billion last year. The profit is now the lowest quarterly profit in two years. Despite the demand for Samsung smartphones growing weaker, the smartphone giant was quick to indicate that most of the revenue had come from smartphone sales. There was also deep concern regarding Samsung Galaxy S5‘s ability to continue to sell considering that the phone has hardly flown out of the shelves since it was released earlier this year.
Chinese brands have also cut into Samsung’s market with most of them manufacturing cheaper phones with high specifications. Samsung blamed the slowdown of mobile sales for the poor showing of its second quarter. The company also claimed they had to spend greatly in marketing in order to clear the stock that wasn’t selling.
Samsung is aware of the impending release of possibly two larger iPhones in September. This could also prove to be a major challenge depending on what Apple has in store. However, Samsung itself also intends to announce the release of more flagships in the next quarter which includes the Galaxy Note 4 and Galaxy Alpha. We expect these phones to perform very well in the next quarter if Samsung is to turn things around despite the continued fall of the average price of smartphones world wide.