Samsung admits 'Weak demand' -- It's Worse Than We Thought

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.

I can understand why HTC and Sony aren't doing too well in the industry, but I always had thought Samsung was doing fine.

I've fought off buying an iPhone for years, but I guess I can see how this article is true considering that I've realized a lot of the stuff Samsung does with its phones were "answers" to things that would come out on iPhones, and usually not done nearly as well. Three out of the five members in my household are actually switching from Samsung phones to iPhones mainly because the screen size has finally caught up, I'm guessing this is going to be a very common occurrence in the coming months

I'm not really surprised, Samsung's flagship devices aren't very good, especially their tablets. Their momentum seemed to peak during the Galaxy S3 and again during the Galaxy Note II (but less).

Nexus devices, or close to vanilla devices such as the HTC One M7/M8 or Moto G/X offer a much better Android experience. Samsung's UI is a mess.

The Nexus phones, and companies like Xiaomi (or OnePlus/OPPO) have shown that you can own a high end device for a relatively low price (300~350 USD). Xiaomi has plans to come to the US in 2015, that should help change the Android market's landscape.

Programs like Android One (low cost / reasonably equipped devices running vanilla Android L and getting updates pushed directly from Google) are also going to be another threat for Samsung at the bottom of the market in developing nations.

Android One might not be limited to low end devices either (rumoured Android Silver program).

@NVIDIATI: I think you're absolutely right. The race to the bottom is bloody, and Samsung has too much overhead to win. Apple will continue to own the top end of the market and everyone else will be left with cheap scraps at the bottom.

The coolest thing about that phone is the FM radio. Savvy addition to the hardware. The one thing to be cautious of is Google's inability to succeed in any meaningful way with hardware. Everything they do that isn't advertising just ends up costing them money, sometimes to the tune of billions in losses.

@musicalmac

"Cheap scraps"? Stop with the theatrics.

The Android One device shown is one of Google's reference designs for developing nations that's being built by a separate manufacturer (Micromax). Google is not entering the hardware market.

@NVIDIATI: One of the biggest takeaways from me trying the iPhone this year was the fact that Google isn't a hardware company. My biggest frustration has always been the inability to have something as unified as iMessage, Facetime and the other user-to-user functionality that iOS seems to offer as universal baked-in functions across all devices of all classes using iOS. Convincing my friends to download and register for skype, tango, and kick messenger was always an inconvenient thing to do. I'm seeing that Apple probably was right in taking the approach they have. They were, for decades, always a hardware company, and even a software company, while Google has always been an advertisement company. Google doesn't have as granular of an understanding or the decades of experience that Apple has for designing hardware and software in tandem to work seamlessly together.

I've done quite a bit of research on this and I'm starting to see that having a fragmented ecosystem isn't just an inconvenience to developers, it's also an inconvenience to users like me. For instance, the sharing system Samsung has in place for its devices work just fine... Given that your other friends have the same specific models capable of doing the same. The problem is, there's so many different Android devices that have been reprogrammed in every which way that there really hasn't been any meaningful way to bring unified services in the same respect that Apple has achieved on across iOS and even between its desktop OS's.

It's only been a week or two since I was handed a 4S, and even on this old phone I'm seeing why people have been praising its ease of use. What I find interesting is that this four year old phone is performing just as fluidly as the S4 I came from, and the S4 was not only newer but also much bigger in size. The way iMessages, Facetime, file-sharing, location sharing and "everything-else-sharing" works is much more seamless and intuitive, and the great thing about it is I haven't had to ask anyone to download an app or perform any steps to accomplish any of it, more less explain to my parents how to work their device. The family decision to try iOS so far has greatly improved the way we coordinate and communicate with each so far, and even my two siblings that initially was against it is starting to show growing curiosity.

It's because of these things that I believe that maybe Apple has been right all along with how a smartphone should be. I used to find a lot of their choices questionable and downright frustrating, but now that I think about it, their extremely cautionary approach throughout the evolution of the smartphone actually should have been a telling sign on the amount of thought they've put into building what they offer. The whole "doing it right versus doing it first" mantra of their really shows, because right now I'm seeing that everything "just works" as it should and without much thought or effort.

@mister-man I can't blame you for thinking poor about Android after experiencing the Samsung ecosystem (or just about any skinned Android). However, their devices do NOT represent Google's Android experience.

For too long OEM's spent time making Android into their own OS, but that created fragmentation and frustration for the consumer. Google has been working towards building up their own walled garden, while allowing for greater levels of openness that Apple would never allow.

Android L is a game changer for Google, a unified system that reaches beyond mobile to Android TV, Android Auto, and Android Wear. In the case of Android Wear/Auto/TV, Google will not allow any OEM's to skin or customize the OS. Changing Android's runtime from Dalvik to ART will improve performance and enable Android to easily run on 32 or 64 bit ARM, x86 or MIPS hardware. Programs like Nexus and Android One (Silver?) allow for Google to control the OS while OEM's design the hardware with certain requirements from Google. Some OEM's such as HTC and Motorola have been using a 'close to' vanilla Android on their devices with some success.

In the end I think it's best to do what works for you. Leaving Samsung for Apple was a good decision, especially given your situation.

@NVIDIATI: Prior to Samsung, I've been in bed with HTC, Sony and LG in respective order. The worst Android phone I've ever owned had to have been the Droid. It crashed frequently and on rare occasion would decide to under-go a seemingly self-induced data wipe.

It just seems like we're eating our own words when we say good things about Google making its attempts at the "walled garden" approach when you consider how long we spent playing down Apple's strategies. The thing about what Google is trying to do with Android now, is that it's been all employed by Apple long before, and they've already had half a decade tweaking, refining and improving the experience. In fact, one of the major reasons why I've decided to switch over was exactly that. Google has just been tailing Apple and encouraging OEM's to employ the same services and features Apple has brought to the table.

I never thought I'd say this, but it's been about a week or so already, and I'm pretty confident that Apple actually sprinting with what they know, while Google seems to still be tying its shoes. I don't know, man. I've spent a long time loathing Apple for no reason other than it seemed like that was the thing to do. Every iPhone that has released, you'd be hard pressed not to find a bunch of people mocking the products and its users... And as a humble admission, I've got to say I used to be one of them. I'm willing to slowly eat my words, however. After spending six or seven years getting to know what Android offers, I really am starting to see why people prefer iOS. All the integration and seamless inter-operability that you and I have been waiting for Google to deploy has long existed on iOS for over half a decade, and from what I'm reading, will only get that much better when iOS8 releases in a couple of months. Again, I reiterate, it's a very telling thing when a 3-4 year old iPhone 4S is performing at the same level as my S4, and without a hiccup or nary a glitch, and with the added benefit of cross-user functionality. My biggest thing is gaming, also. I. Have. No. Idea. Why. I. Never. Gave. iPhone. a chance. Though I miss having my ROMs available, I have got to say that gaming on a 4S so far has been a largely eye-opening experience. I don't know what differences there are that make games on Android and iOS that much different in quality and polish, but it's there and I'm not making it up. The gaming library on iOS is absurd, almost dizzying, but so far everything I downloaded from the .99 cent games to the bigger budget $5-$10 games are absolutely entertaining. Dare I say it, I can see myself completely replacing my 3DS and PSP with the iPhone 6. I don't know why Apple doesn't advertise their devices as a great gaming platform, because that's what they are. And as a gamer, my heart is being won over.

I'm not hating on Google or anything. I guess I'm just saying that I regret not giving Apple a chance before. Almost feels like I just joined the "Avoid-Apple" bandwagon without really every trying it and thinking for myself.

@musicalmac: I've been reading your post history (not because I'm in love, but because the insight you bring to the table has largely been beneficial for me to understand iOS and Apple more)... And I've got to say that so far I haven't read one post of yours that didn't make sense. In retrospect, I'm thinking that what's been happening with Android was a little inevitable to begin with. A lot of the stuff you say have been things I've sort of felt, but didn't quite know how to describe or begin to find where the dots connected in the larger picture of things... I appreciate your dedication to this forum, like I said, your posts have been a large source of understanding what I'm getting into.

Anyway, I really do hope that people here actually open the blinders and give Apple an unbiased chance.

I made my switch to Windows Phone after my SIII and never looked back and now MS is working hard on establishing an ecosystem to work between Windows Phone and Windows 8 seamlessly. Plus Threshold should be uniting both RT and Phone 8.1 soon.

@NVIDIATI: Google already did enter the hardware business, and they failed to the tune of billions with a b. If the situation were reversed and it was Apple who had purchased and sold a company like Motorola, they'd be raked over the coals for a decade for their incredible failure. They're still making Google Glass, too, as I understand it.

@mister-man: I appreciate the kind words. I make sure to post things I'm confident I can support. When one contributes from a position of strength, it's beneficial to everyone.

Looks like it's worse than we all thought.

Ouch: Eight-month-old iPhone 5s outsold the Galaxy S5 in its first full month of sales

Ouch, indeed.

@mister-man: I'd have to agree with your post, I have AT&T and my wife has the 5c while I have the LG G2 and her phones dual core, can run circles around my phone which has a quad core and 2gigs ram. Games run smoother her phone gets better connection and battery life, on LTE she averages anywhere from 20 to 50 mbps and all of her apps works flawlessly 95% of the time, I'm not even gonna get into the retina display and it's beauty. My G2 started out beastly but then got worse and worse until I had to root it and tweak the kernel to make it run better, not to mention most of the time I'm stuck on 4g while my wife is still on LTE. I have tried every Android manufacturer except Motorola and I'm sad to say that next to the original Evo my G2 has been the best Android experience yet, nothing android beats the original Evo IMO though. The one thing I do like about the G2 is that the stock rom comes with pretty much everything you would find in a custom rom on XDA.

As for Samsung I don't feel bad for them because they brought this upon themselves by trying to flood the market, I believe Samsung is the only reason phone companies started the upgrade every year deal because that's how long it takes Samsung to release new phones and they were the most popular phones at the time. I was so mad when I got my wife the S3 only to have the S4 release a few months later, same thing happened to my sister-in law. She bought the S4 only to have the S5 come out earlier this year with all of the features already found on my G2. My next phone will definitely be an Apple because it just works and better for productivity.

@slimdogmilionar: Yeah, I definitely hear you when it comes to work and productivity. The apps on iOS that I've found in this regard are leaps better than anything I've experienced in the Android ecosystem.

This reminds me of the whole "iOS can't get real work done" mantra that used to be thrown around by my friends. I'm starting to realize there's been this whole trend for hating on Apple for unbased reasons, mostly things that Apple actually does a lot better than Android, but I guess when a person stakes an opinion on something, it becomes hard to change minds, and eventually you just nitpick everything about whatever it is you've decided "isn't good."

LOL I was definitely one of the one's guilty of that.

@slimdogmilionar: @mister-man: The "iOS can't get real work done" mantra is, as you've both pointed out, completely meaningless. End users such as ourselves enjoy parity with the iWork suite on iOS, OSX, and the web. It's an incredibly helpful and well-constructed set of productivity tools that all communicate seamlessly. And that ignores the rich app ecosystem that includes gobs and gobs of high quality productivity apps.

Samsung enjoyed initial success by cloning as closely as they could the features and look of the original iPhone, essentially riding the coattails of Apple to the land of enormous profit. What Samsung hasn't quite managed are the same margins as Apple, who enjoys twice Samsung's mobile profit while shipping (selling) half as many mobile devices. Bad spot to be in -- as we can see here. Samsung is losing in the high end, and badly at that.

I'm going into this second bit here because Samsung has done it again, completely and totally (without an ounce of shame) riding the wave of Apple's decisions.

Samsung Unleashes 'Level,' Its Beats Headphones Competitor

It's legitimately embarrassing.

I think people,should try Windows Phone before switching to iOS. The best Windows Phone are Nokia's and they are already planning on some good high end phones coming this fall. The OS is so good, that even the majority of apps can run on low end hardware better than Androids' app that may require more processing power.

I love how smooth my Nokia Lumia Icon runs compared to my moms iPhone 5s

Welp -- It's worse than we thought, amazingly.

“Operating profit at its mobile division—its biggest profit generator—fell 30% as the company faced more competition from Apple Inc. and a flurry of low-cost Android phone makers.”

What was it I said? That bottom of the barrel Chinese android handset companies would be more damaging to Samsung (and other android-dependent companies) than Apple?

The race to the bottom is bloody, another example. They'll keep coming, too.

Not surprised, now that apple will be releasing larger screen iphones, samsung will continue to suffer

Hey lots not forget that Samsung still made Billions of $$ making mobile devices this year. So they are wining about having some competition eating their margins, well isnt that exactly what they did to Apple. So personally i dont feel sorry for them.

On the other hand competition is good for the consumer. HTC has been making some Beautiful phones this year. Even Microsoft / Nokia have made some nice devices. I had a 920 for a while before it got stolen, the camera was amazing, the interface was slick, and now there are actually Apps for it too.

IMHO Apple are no longer the innovator, copying Samsungs form factors, and Nokias colour schemes. Clearly they still make tons of money, but they have lost their visionary may he rest in peace and Dr.Dre is no replacement. Apples share of the market will continue to be eroded by the competition, as Android phones exist in a harshly competitive environment that forces improvement at a rapid pace.

I think they all expected the uptake of mobile devices to increase linearly, but we all have one now, so eventually sales have to tail off ...