You'd swear I can see into the future.
Samsung's marketing budget has always been vast, but in the last quarter it was far larger than even the manufacturer itself would have liked. The company admits that it's been forced to spend extra money on promotions for older and lower-end devices that have been filling up its warehouses due to "weak demand." This dip in trade, combined with the extra spend on publicity, is causing the company's recent, gradual profit decline to quicken: it now expects to earn around 24 percent less this quarter than it did a year ago, with underlying sales down by an estimated 8-11 percent.
Samsung claims the main underlying causes are stiffer competition in Europe, especially in the low- and mid-range parts of the market (presumably from the likes of Motorola), as well as a tougher climate in China, where many buyers are choosing to hold out for 4G phones rather than picking up current 3G models. The manufacturer also says that its 7- and 8-inch tablet sales, which have already been suffering from a slow upgrade cycle, are further being cannibalized by sales of 5- and 6-inch phablets.Credit Engadget
Welp, I've been saying this for some time now, quite honestly. The fight to the bottom is bloody and ultimately unsustainable. HTC, Blackberry, Motorola, Sony, and other largely insignificant players in the mobile world can attest to this principle with their financial issues.
Expect this trend to continue at some level over the next few quarters. Also expect Apple to continue to eat Samsung's portion of the mobile profit pie during that same time. This is especially relevant at this time given the expectation that tablet style computers will out-sell traditional PC computers in 2015. Good to be Apple.
Apple's unique advantage in the market isn't that they can sell premium products at a premium price. Their unique advantage is their institutional priority, that making great products is their focus, not simply focusing on turning glass and silicon into dollars and cents.