The Samsung should release a second consecutive quarter of profit decline, pressured by loss of vigor in the operation of sophisticated smartphones, a trend that should make the company enhance the focus on cost containment and the segment of cheaper models.
The largest manufacturer of smartphones in the world is counting on the fifth version of the Galaxy S phone, which goes on sale globally on Friday (11) to prove that the South Korean technology giant following innovative.
But the Galaxy S5 had a poor reception in South Korea, where the launch of the device was hampered by a temporary ban on sales of mobile phone carriers and by criticism about lack of flashy features.
In a sign of the challenges, Samsung priced the S5 about 10% cheaper than the S4, even with expectations that Apple, its main rival, will not update its product line until September. The South Korean company also reduced marketing campaign to keep costs stable.
“This strategy gives competitivade price, which may help the sales volume and profit defend in general,” said Lee Min-hee, an analyst at IM Investment.
“The Galaxy S5 is not something that will astonish investors … and is basically the same phone top-line right now. Smartphones offer no more revolutionary innovation and are treated at some point.”
In this respect, the Galaxy S5 marks a major shift for Samsung, who is leaving the emphasis on hardware innovation to highlight features such as polished design.
JK Shin, executive co-chairman and director of the mobility area from Samsung, called the strategy “back to basics”, in the hope that it will help the largest technology company in the world by revenue and contain costs of components and make their more flashy products to a wider audience.
The average expectation of 40 analysts polled by Thomson Reuters I / B / E / S indicates an annual 3% drop in operating profit from Samsung in the quarter January-March, to 8.5 trillion won (U.S. $ 8.1 billion ).