Thinking the unthinkable: are Samsung's glory days numbered?

Thinking the unthinkable: are Samsung's glory days numbered?Samsung and Apple have come to completely dominate the mobile industry over the past couple of years, leaving most their rivals barely even able to make a profit never mind provide meaningful competition.

But the times they are a changing, it seems, and having reached the lofty heights some are suggesting Samsung could be about to begin its slide back down again.

For the first time since 2011, Samsung is saying its quarterly profits for Q4 2013 both failed to match industry expectations, and also failed to improve on the previous quarter.

Now obviously it's not possible simply to keep going up and up, and let's not kid ourselves – an operating profit of £4.7bn for Q4 2013 is still more than most other companies could even dream of.

But missing analyst expectations is always a bad sign, especially for a company that's been as successful as Samsung over the past few years. And you don't need to be making a loss to be stuck in a downward cycle – HTC and Nokia are two recent examples of companies that were clearly on the slide long before their balance sheets went into the red.

Samsung's adjusted forecast doesn't go into too much detail, but observers are pointing to two factors as likely reasons for the flatter than expected quarter.

The first is a mammoth £456m Samsung shelled out in a one-off employee bonus in December to mark 20 years since the adoption of what Samsung calls its “new management initiative” – effectively the gameplan that propelled it to where it is today.

The second is more serious. Estimates are that Samsung sold a total of 119m handsets – both smartphone and feature phone – in Q4, as compared to 120m in Q3. That seems reasonable enough until you take into account that Q4 is the holiday season, where technology product sales are typically 20-40% higher than at other times in the year.

Worse still, the dropoff seems to be happening mainly at the premium end of the market, which is where the big profits lie.

There's no question that the iPhone has swung the momentum back in its favour over Samsung's Galaxy S4 and Galaxy Note 3, while rival Android handsets such as the LG G2 and HTC One have provided stiff competition for particularly the Galaxy S4.

Samsung is expected to respond by outing its successor – the Galaxy S5 – earlier than expected, potentially next month at or around Mobile World Congress. Given how important the halo effect from the Galaxy S series has been for the rest of Samsung's smartphone range over the past couple of years, its reception could go a long way to deciding whether this is just a blip in the road or the start of something more serious.

Via NY Times

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13 comments

dursty  Jan. 8, 2014 at 20:01

They're still making money though? Analysts are always thinking that if there's no growth then its a disaster. However at some stage, the growth is going to plateau when you get to the top of the market.

matt101101 / MOD  Jan. 8, 2014 at 21:24

You know how people always bang on about Apple being doomed, yet we all know it's utter rubbish? Yeah, well that, just replace Apple with Samsung.

If you add that one off 456 million quid Samsung spent on bonuses onto their operating profit, suddenly, ooh look, they've once again made more money than they did in the previous quarter.

socialjeebus  Jan. 8, 2014 at 23:51

You know how people always bang on about Apple being doomed, yet we all know it's utter rubbish? Yeah, well that, just replace Apple with Samsung.

If you add that one off 456 million quid Samsung spent on bonuses onto their operating profit, suddenly, ooh look, they've once again made more money than they did in the previous quarter.


Not just that, but Samsung suffered from the gains that the Korean Won made against the dollar since the summer.

2013 as a whole saw record revenues, sales and profits for Samsung Electronics so I think it's a little bit early to be banging the old doomed drum.

Like Matt said, it's as ridiculous as saying Apple's days are numbered.

Treab  Jan. 8, 2014 at 23:59

some of us can dream about apple being doomed.

LeRevolution  Jan. 9, 2014 at 03:51

Does anyone in the real world actually CARE what analysts say, apart from analysts and their cocaine dealers..?

JanSt / MOD  Jan. 9, 2014 at 07:25

some of us can dream about apple being doomed.

what would you trolls do without Apple? :p

cowbutt  Jan. 9, 2014 at 11:14

Samsung capitalises on making almost every component used in a modern smartphone to deliver tomorrow's specifications at next year's prices, today. That's the good, and it makes their products very competitive on the surface.

The bad is that they just don't seem to have very high standards for quality control, and especially firmware (whether that's their fork of Android, their smart TVs, or even the embedded firmware that controls the wear levelling in their eMMC parts). When people realise this (probably through being bitten personally), I think it'll sour their enthusiasm for Samsung as a brand and result in declining customer loyalty in spite of the shiny features and competitive prices. They don't seem to realise that building solid products builds customer loyalty.

JanSt / MOD  Jan. 9, 2014 at 11:21

Good point.
Take the Galaxy Ace. Typical entry device. Peddled by every network. Pure and utter rubbish.
For many it was probably the only and last Android/Samsung ever.

Treab  Jan. 9, 2014 at 13:37

some of us can dream about apple being doomed.

what would you trolls do without Apple? :p


Move onto nokia ;)

JanSt / MOD  Jan. 9, 2014 at 13:57

Nokia rule. Apple too. And Samsung...

dursty  Jan. 10, 2014 at 07:04

Good point.
Take the Galaxy Ace. Typical entry device. Peddled by every network. Pure and utter rubbish.
For many it was probably the only and last Android/Samsung ever.


You're thinking on a tech spec level, the ace did amazingly well because it hit a price point for joe bloggs.

The market has only two real areas, the sub £100 smartphone and the premium £300+ area. There's no gulf in between. People who wanted to buy into the brand for S2/S3 but didn't have the money then went for the Galaxy Ace. It was a no brainer & served Samsung very well.

(Galaxy Y is another candidate for that area too)

matt101101 / MOD  Jan. 10, 2014 at 14:33

Good point.
Take the Galaxy Ace. Typical entry device. Peddled by every network. Pure and utter rubbish.
For many it was probably the only and last Android/Samsung ever.


You're thinking on a tech spec level, the ace did amazingly well because it hit a price point for joe bloggs.

The market has only two real areas, the sub £100 smartphone and the premium £300+ area. There's no gulf in between. People who wanted to buy into the brand for S2/S3 but didn't have the money then went for the Galaxy Ace. It was a no brainer & served Samsung very well.

(Galaxy Y is another candidate for that area too)

Jan's point was that the Ace was a bug-ridden piece of crap which will have put many people off Android/Samsung phones.

JanSt / MOD  Jan. 10, 2014 at 14:39

Yes, that was Jan's point :p

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