Samsung Electronics Co Ltd (KRX:005930) says it will struggle to meet demand for the Galaxy S6 Edge due to be released on Friday in 20 countries around the world. Production constraints mixed with hefty demand for the curved screen smartphone were the factors management said would be responsible for the shortage.
J.K. Shin, the Samsung Electronics head of mobile, said that the company will be unable to keep up with demand for the innovative new smartphone. The Galaxy S6 Edge has received good reviews in the last week, building demand for the device. The Samsung Galaxy range is the only premium smartphone with sales even approaching those of the Apple Inc. (NASDAQ:AAPL) iPhone.
Samsung S6 Edge Launch
The Galaxy S6 Edge will be released alongside a sister model the Galaxy S6. That version will follow a more usual design state, incorporating the latest technology inside of an un-daring smartphone body. The Salaxy S6 Edge, however, seeks to deliver something very different to the world’s more enterprising smartphone buyers.
A curved screen along one side of the device will give users an entirely new way to interact with their smart phone. What initially looked like a gimmick has proved to be a hit with some reviewers, and sales of the Samsung Galaxy S6 Edge are now expected to be substantial. The sales of the entire new premium Samsung range may be the deciding factor about the future of the firm.
For Samsung not being able to supply enough units of the Galaxy S6 Edge isn’t exactly a positive, but it does speak to the high level of demand the company, and carriers around the world, are anticipating for the device. The worry is that the lack of units of the higher margin S6 Edge will lead customers to purchase the vanilla S6, or even a competitor’s smartphone.
Samsung looks for a turnaround
Samsung Electronics mobile sales in the high end of the market peaked with the release of the Galaxy S3. Since then the firm’s profits have been eaten alive by lower premium sales resulting from competition with the iPhone and other Android handsets. At the same time, the rise of domestic smartphone builders in China has resulted in a drop in sales at the lower end of the market.
The Samsung Galaxy S6 Edge is not labelled an “iPhone-killer” by the media, it’s labelled a Samsung saver. If the device manages to sell in high numbers and demonstrate that demand for Samsung phones is still there if the right device is on offer the company will be happy with its performance.
Earlier this week Samsung Electronics released a preliminary report about its financial performance in the first quarter of 2015. The company showed that though revenues were still in decline, the firm had managed to get back to stable profitability.
On today’s market in Korea shares in Samsung Electronics Co Ltd traded up a fraction on the news. The company’s shares have gained close to 12% since the beginning of the year. Much of that increase is the result of the positive reception of the Samsung Galaxy S6, and high expectations for the company’s semiconductor division.