South Korea-based device manufacturing giant Samsung Electronics says it plans to reduce the number of smartphone models it will offer next year. The move is part of a strategy of cutting costs to offset declining mobile-device profits. The company will cut the number of models by about 25 to 30 percent, according to Robert Yi, head of investor relations, who made the remarks during a presentation in New York. Samsung did not disclose the number of models that would be affected by the reduction.
Samsung’s position in the worldwide device market is being eroded by two forces—one, the new iPhone 6 models from rival Apple, whose larger screens compete directly with those of Samsung’s flagship Galaxy models; and two, a more fundamental challenge from Chinese manufacturers that are producing well-designed low-priced phones that approach or match many of the specifications of high-end devices. In the third quarter of 2014, Samsung saw its profits from mobile devices go down by 74 percent.
Cutting down on its range of devices could plug the hole to some extent, but cost reduction is by no means the whole answer. According to a recent report, the company is transferring hundreds of engineers from its mobile division to an Internet of Things (IoT) initiative. That makes sense on more than one level. Samsung already makes many non-mobile devices, from washing machines to TVs, that ultimately could be connected to mobile networks in the emerging smart-home sector of the IoT. Adding the ability to connect to the internet via mobile networks would be a natural step, and one for which Samsung is eminently well-qualified. Beyond that, though, if the idea of enabling a plethora of devices and appliances—not only in the home but in the workplace and elsewhere—to be controlled by mobile devices truly takes hold, there will be a wealth of opportunities for savvy manufacturers to profit from it.
The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week or to contact the Tarifica Research department: http://www.tarifica.com/contactus.aspx
The Tarifica Telecom Industry Research Department