Samsung’s global profit falls as S6 launch looms
A smartphone dealer attends to a customer in Kampala. Samsung registered a fall in its first quarter earnings. PHOTO BY RACHEL AJWANG
Kampala. Squeezed by competition in the high-end smartphone market, profits at Samsung global have for the sixth quarter running dipped, by about 30 per cent, the South Korean manufacturer said yesterday.
However, its continued profit plunge has left its global status as the smartphone leader fragile with its major competitors such as Apple gaining ground.
A report by research group IDC released in December 2014 revealed that Apple’s total unit sales in the quarter nearly tied Samsung’s, despite the fact that Samsung sold 33 million more handsets in the same quarter, a year earlier.
What it means
Samsung currently has the largest market share of phones in circulation in the Uganda. Sector analysts forecast that its continued loss of ground to its competition – Huawei, Apple and other brands – not only impacts on the supply of its products on the market but also affects the foreign exchange the country gains off tax.
“Ultimately, it is the consumer to bear the brunt. Their phones that are cheaply priced may become pricey and yet the other brands may not guarantee the same quality,” notes Mr Amos Ayesiga, an ICT sector analyst.
In the same period, fourth quarter statistics indicated that Samsung’s global market share was 20 per cent, compared with a roughly four per cent to seven per cent global market share for each of its other major Chinese rivals Lenovo, Huawei and Xiaomi, respectively.
“The S6 phone is our flagship product and when it launches this week, we shall all be working at ensuring it boosts the sales of our product,” explained Mr Amos Mulago, the assistant country manager Samsung.
Despite the fall, Samsung exceeded expectations by posting an operating profit of about $5.4 billion (Shs16 trillion), in the quarter.
Uganda’s case
However, in Uganda, the company grew in the same period (between January and March 2015) as it posted 25 per cent compared to 21 per cent from the previous year and its country management remains optimistic that with the launch of the Galaxy S6 phone, growth will be accelerated.
Tracing the dip in Samsung's profit
Samsung said it expected an earning of $5.4 billion in operating profits for the quarter that ended on March 31.
The year 2014 was perhaps the worst year for Samsung where the company saw a fall in profits of about 60 per cent in profits over the last quarter of the year.
