Samsung hit hard by smartphone slowdown, profits plunge 40pc

28 Jan 2016

Samsung, like Apple, is facing increased competition at the high and low ends of the smartphone market

Apple isn’t the only smartphone maker reporting stalled smartphone growth – Korean electronics giant Samsung reported a 40pc year-on-year drop in Q4 net profit.

The news comes just days after Apple reported its slowest iPhone sales growth since the iPhone launched in 2007, with sales up just 1pc year-on-year.

But, unlike Apple, which is still making obscene amounts of cash, Samsung has been fighting to arrest a nosedive.

Net profit for the crucial October to December quarter stood at 3.22 trillion won ($2.7bn), down 39.7pc from last year.

Smartphone saturation

Samsung is not being helped by the fact that the smartphone market is saturated, and it is being squeezed at both ends of the high and low-end smartphone market by players like Huawei and Xiaomi, which can churn out affordable, high-class smartphones.

All in all, 2016 is set to be a disappointing year for smartphone makers and many eyes are on Apple to set a new benchmark with devices like the 4in iPhone 5se tipped for March and the iPhone 7 expected later this year.

For Samsung, all eyes will be on what it reveals at Mobile World Congress this year. Last year, it unveiled the classy Galaxy S6 and S6 Edge devices but was dogged by inventory, supply chain and pricing problems.

IDC recently warned that, after a decade of almost unstoppable growth, the global smartphone market will slow to single-digit growth this year.

Samsung said that it intends to overcome the tough economic headwinds by focusing on opportunities in areas like internet of things software and displays.

For IoT, the company plans to focus initially on Smart Home and Smart Health, leveraging the strength of its overall ecosystem in areas like TV and consumer white goods.

“For the mobile business, the company will focus on strengthening the competitiveness of its software, along with hardware, services and wearable products. For the consumer electronics business, the company plans to lead the Smart Home era with diverse IoT-enabled products,” Samsung said.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years