If you’d said to someone in 2007 that Nokia and RIM (now BlackBerry) would shortly drop out of the Top 5 Smartphone Manufacturers completely, you would’ve probably received a slap in the chops. Nokia held an outrageous 49.4% market share followed by RIM on 9.6% (Gartner), and no one else was worth mentioning. The iPhone? Pah! Don’t make Sharp laugh.
Fast-forward to 2014 and Samsung has enjoyed many a month on the throne (er, that’s the king’s throne as opposed to the toilet), but the cracks? They are a-forming. Is Samsung about to pull a Nokia?
“Don’t be silly,” is the answer to that particular question. Nokia’s fall from grace was nothing short of spectacular, and Samsung at least has its finger on the pulse. To an extent.
But still, there are signs that the world’s number one mobile manufacturer is losing its grip – mentally, financially and in terms of market share.
Samsung’s financial Q2 2014
Despite being bolstered – in theory – by the release of the Samsung Galaxy S5, the South Koreans had a relatively terrible Q2 2014.
In operating profit, Samsung took a 25% year-on-year hit, from roughly £5.5 billion to just over £4 billion. Ouch.
Samsung blames increasingly furious competition in China and Europe, the strength of the Korean won, and longer replacement cycles for smartphones and tablets.
Any way you look at it, Q2 2014 was Samsung’s worst quarter in two years, and the manufacturer acknowledges the “challenge” ahead.
Samsung’s Q2 2014 market share
Chinese manufacturers continue to eat into global smartphone market share, and Samsung and Apple are the real losers.
Apple at least managed an increase in shipments in Q2 2014 vs. Q2 2013, so while its market share fell from 13% to 11.9% year-on-year, it recorded growth of 12.4%. As is typically the case for Apple, it’s growing, but not as fast as the overall market.
As for Samsung, well, Q2 shipments were actually down year-on-year from 77.3 million to 74.3 million. In market share terms, that’s a drop from 32.3% to 25.2% - roughly a third to a quarter. Again: ouch.
The Chinese sharks have drawn blood, and IDC reckons there are “more than a dozen vendors that are capable of landing in the top 5 next quarter.”
Samsung’s recent output
Looking at Samsung’s recent output, you really have to wonder if it’s worth bringing in stricter quality control.
Late last year, the South Koreans claimed to have “Reinvented the watch” with the Samsung Galaxy Gear, a spectacular piece of marketing hyperbole that even Samsung didn’t buy, quickly acknowledging that the Gear was “lacking”.
Consensus is Samsung was simply determined to bring a wearable to market before the iWatch.
And how about the Samsung Galaxy Round, a phone curved around the vertical axis (what the…?) meaning when it’s resting on a table, you can tilt it towards you to bring up notifications; “Roll Effect”, they call it. Yeah, that’s just what the world is crying out for, Samsung. Sadly it remained exclusive to Korea.
Tizen was tipped to be a thoroughly disruptive force in mobile, possibly even driving a wedge between Samsung and Google/Android. Alas, it’s been postponed indefinitely as Samsung tries to convince developers it’s worth supporting.
But even Samsung doesn’t believe that, conceding that there’s not much room for yet another smartphone OS in addition to Android, iOS and Windows Phone (and BlackBerry 10, oops). If it does see the light of day, Tizen will likely stick to emerging markets.
While we’re criticising Samsung, let’s not forget that perforated rear on the Galaxy S5. The gold in particular was compared to a “Band Aid”, and the perforations were seemingly responsible for Samsung’s head mobile design guy being, er, “realigned”.
Looking ahead, the Samsung Galaxy Alpha is supposedly intended to throw a spanner in the works of the iPhone 6 launch, but we seriously doubt many potential iP6 buyers are going to settle for an Alpha simply because it looks a bit like an iPhone. What an odd tactic.
I’m no analyst, but I reckon Samsung’s problem is that it’s a Jack of all Trades, master of none – other than maybe phablets. Samsung Galaxy Note 3 aside, there’s not a single device you could point at and say: “Yep, Samsung has absolutely nailed it.”
At the high end, Apple continues to perform well with a firm focus on premium products, and the iPhone 6 will likely be the biggest selling phone of the year, driven by those larger displays.
At the low end, the Chinese manufacturers are coming, and even in the west, Samsung has emphatically failed to provide something as appealing and wallet-friendly as the Motorola Moto G or even the Nokia Lumia 520.
In wearables, the Motorola Moto 360 is Android Wear’s big talking point (sorry, Samsung Gear Live), and the iWatch will inevitably be the device that makes the world stand up and take notice of smartwatches. Samsung just doesn’t have that same draw. Maybe if it didn’t have such a watered down output…
Sorry, I appear to have gotten lost in a whirlwind of negativity, but you get the idea. Taking all the above into account, you really have to wonder what the future holds for Samsung. Champagne and limousines aside, I wouldn’t want to be JK Shin right now.