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