Some smartphone manufacturers are starting to see their sales numbers decrease steadily, since almost every person in the world that is able to afford an expensive, high-end smartphone (which provide many of these companies with most of their profits) likely already has one, or just isn’t interested in getting one for the time being.
This squeeze has forced Samsung to announce lower profit and revenue expectations, but the problem has also extended to Samsung’s biggest rival in the market, Apple, as well as BlackBerry and HTC.
However, Samsung’s biggest problem is that the majority of its growth in smartphone sales are at the low end of the market, and down there, the company doesn’t have the most appealing models for most consumers. It also means that Chinese manufacturers will gain a bigger share of their sales.
Analysts had expected Samsung to make profits of around US$8.9 billion in Samsung second quarter for fiscal 2013. Instead, the company pulled in US$8.3 billion, which is lower than expected but is still a record quarter for Samsung ans is still a huge 47% increase from the same period in 2012. However, despite making a ton of money, analysts have downgraded Samsung Electronics shares by 17% since the beginning of the year, while Apple’s have gone down around 21% in the same amount of time.
The problem for smartphone manufacturers sort of mirrors the PC industry, where customers are increasingly starting to base their purchasing decisions on a device’s price, as the wealthiest consumers have already come in and made their smartphone purchases for the time being. Plus, low-end devices are now starting to accrue more sophisticated features and capabilities, meaning its harder to differentiate the value of their high-end counterparts. Samsung and Apple, who specialize in high-end models, are heavily affected by this.
Luckily for Samsung, even if the smartphone profits continue to decline, the company is still the biggest producer of the semiconductors that smartphones and other computing devices use, so that could help its overall profit margins rebound in the second half of the year.
[via The New York Times]