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Samsung Electronics Co Ltd (005930) Focus Is on Cheap Handsets

Samsung electronics

Samsung Electronics Co Ltd mobile division saw a decline last quarter as well. Now, the firm has decided to release two new phones in China to compete with Xiaomi and other local players that offer quality devices at insanely low prices, in a hope to gain a larger share of the China’s phone market.

Samsung electronics

Samsung now focusing on sales volume

Samsung has branded the new phones ‘Galaxy On.’ The first variant is called Galaxy On5 that has a 5-inch screen, and is priced at $125 while the other variant called Galaxy On7 has a 5.5-inch screen, and is priced at $170. Samsung hopes that these phones will help to drive up sales volume.

Data from Counterpoint Technology Market Research found that Samsung’s more expensive phones are a small percentage of total smartphone shipments. In the Q3, Samsung shipped more smartphones on YoY basis, and a greater portion of it were the phones priced under $200.

Samsung is back to business as usual with the launch of the new ‘Galaxy On’ phones. A report in September claimed that Samsung has decided to shift its corporate priority toward profitability. Earlier, seeking growth in key businesses was the priority.

Both Xioami and Huawei have posed a threat to Samsung Electronics Co Ltd in China, and forced it to pay more attention to lower-priced phones. Consumers, who cannot afford to buy premium devices, are the ultimate winner in this war between phone making firms in the emerging market.

Samsung is not Apple

Counterpoint Research’s conclusion is also worrisome for the firm. The high-priced Galaxy S6 and S6 Edge are not driving sales rather it’s the mid-range Galaxy J that has kept Samsung at the top among the phone makers.

Sales are weak at the top-end of Samsung Electronics Co Ltd ’s portfolio, thus, it needs to sell more handsets with less return to maintain its place in the market. The problem is that if a firm has to rely on a mid-range handset for driving up the sales figure, then it has fewer opportunities to lead the conversation and impact the perception that the public has of what a smartphone is.

Apple has a strategy of going after high-end users. It sold around 14m handsets to users who were using Android devices previously in the last quarter. This ability helps Apple make over 90% of the smartphone profits.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.

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