Samsung’s Q2 results reveal ‘sluggish’ tablet sales, slowdown in smartphone market

Ian Hardy

July 7, 2014 8:58pm

Samsung, the world’s biggest smartphone maker, announced today that its Q2 results were not up to par with analysts’ expectations. The Korean company declared sales of approximately $51.4 billion USD (52 trillion Korean won) and raked in an operating profit $7.1 billion (7.2 trillion won) across all its business units.

This is the second straight quarter Samsung declined in both sales and profits, and was reportedly caused from “a slowdown in the overall smartphone market” and “increased competition in the Chinese and some European markets.” Apparently customers are seeking a smartphone that have a premium design like Apple’s iPhone, or seeking entry-level prices from competitors Xiaomi and Lenovo.

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Samsung also noted that tablet sales “were sluggish due to a longer replacement cycle than that of smartphones, which is usually between two to three years.” Over the past number of quarters, Samsung has hit every tablet size with the Note Pro tablet and the Tab S tablets. An important note to point out is that Samsung declared that “higher shipments of 5-to-6 inch large screen smartphones replaced demands for 7-to-8 inch tablets,” which also attributed to the slowdown of tablet sales.

Coming up in Q3 will be some new additions to its smartphone lineup, possibly the Note 4, and Samsung “cautiously expects a more positive outlook” and stronger sales.

Source: Re/Code

  • It’s Me

    Let the sh*tstorm of partisan comments begin!

    • yosrmite

      This is great news. Shamesung copies apple’s designs and have no new innovative products. They flood the market with garbage and expect people to buy it when they are fed up with all the trash out here from shamesung.

      Good riddance shamesung.

    • marorun1982

      Populations starting to see the crappy design after all this time..

    • MrMM

      Great news indeed – they should close the floodgates and stop releasing a new type of phone/tablet every other week.

      Hopefully they put everything they got into the Note 4 – the only Sammy phone I’d consider buying at the moment.

  • Dimitri

    While that is true, Mobilesyrup didn’t mention that Samsungs warehouse in brazil was stormed and the thiefs took 36 millions dollars worth of phones , tablets and laptops.

    • Devastator

      What does that have to do with Q2 reporting?

      Do you always blindly defend this company just because you might be using one of their products, or did you not know that this theft was reported as happening earlier today?

      The Brazil incident would have nothing to do with the results from last quarter.

    • Dimitri

      What in the world are u talking about?. All i said is that Mobilesyrup forgot to mention this. Calm down there . Second i don’t defend Samsung. Please try again.

    • It’s Me

      Why would they report it? Why would you bring it up when discussing their financials? Should they also mention that one of the Samsung offices got new carpeting?

    • Dimitri

      The fact that most tech media outlets are and even media on TV are as well. Mobilesyrup did it with Blackberry and Apple so why not Samsung?

      U do realize we are allowed to post this stuff as well ?. It seems u guys LOVE to attack people on here . Shame

    • It’s Me

      Nah, not attacking you. Just seemed like a puzzling comment. Like you thought it should have been included as a factor in their slowing performance.

    • Devastator

      Agreed. I read it similar to It’s Me as well.

    • Dimitri

      No thats now what i meant at all. Sorry if it came out to u guys the wrong way tho..

    • MobiDude

      Just bunch of people who’ve over taken the comment section at ms, Constant attacks, useless blab.

    • It’s Me

      Well, you mentioned them together, in the same sentence even. Hard not to think you were suggesting one is tied to the other.

      “While that is true, Mobilesyrup didn’t mention that Samsungs warehouse in brazil was stormed and the thiefs took 36 millions dollars worth of phones , tablets and laptops.”

      Anyway, no point in discussing it now. If you say they are unrelated news stories, then we are all in agreement.

    • Devastator

      Why don’t you try reading your own comment again?

      To me and I’m sure others reading your comment, it seems like you believe that MobileSyrup should be mentioning a theft in Brazil that happened today in an article about Q2 financial reporting.

      While you state you don’t defend Samsung, It certainly appeared to me as sad attempt at finding some reason for Samsung’s poor results.

      Do you understand that these items are not related? If you don’t then I guess we just don’t see eye to eye on this.

    • marorun1982

      No because company have inssurance to cover for those…
      So its worthless i agree with Devestator.

  • Devastator

    This Q2 report would have included nearly a full quarter of sales for their GS5 flagship, which launched at the beginning of April. It’s surprising that they saw declines in sales and profit given how big we were lead to believe the S5 launch sales were.

    If all the speculation around larger iPhone(s) proves true, this could be very troubling for Samsung over the next couple of quarters, especially in the high end smartphone segment. Their statement said they believe they are already losing ground in the low end in the Asian and European markets.

    • It’s Me

      They sell the bulk of their units at the very lowend but get the bulk of their income from their highend. Sounds like both ends might be slipping away.

      Samsung always seemed like a Kia masquerading as a BMW. Maybe the ball is over. Good time for HTC, LG and Moto to make some gains.

    • marorun1982

      They sold over 10 million in first month ( to providers ) here since its came out i only sold 2 at my store ( myself ) sold probably over 200 phone past 2 months… about 50% iphone and 50% android but GS5 not selling much..

    • Jim – Rogers Rep

      60% iPhone 35% Android and about 5% Blackberry over here, Where the S5 could have performed well the M8 destroyed it out of my shop.

  • Knacker

    Sure, because their product are way overpriced and new models come too early one after another without any real added value.
    Koreans should bring back $300 phones which can be updated with new versions of Android several times and they’ll be back in the game.

    • It’s Me

      Who’s that working for now? Samsung is the only android vendor making money, they should adopt someone else’s plan that’s already a money loser?

      Not trying to pick a fight, just honestly wondering what the advantage would be for Samsung to return to making only lowend phones.

    • marorun1982

      I think is point was they should sell the phone for what its worth ( 300 to 450$ max ) they would make less per phone but would sell 2 to 3 time more and really flood the market.

    • It’s Me

      Obviously that was the point. And I’ll ask again, who is that working for? The Nexus line is in that price and are great models. OPPO, OnePlusOne and Moto G all play that game. None of them exactly seem to be flooding the market.

    • monsterduc1000

      HTC is in the black now according to their last market report.

  • Columbo

    Samsung is doing just fine.

    • MobiDude

      Iwatch spam… Galaxy spam, people waiting for the ‘next’ iphone as it’d have bigger screen like the samsung and samsung running out of ideas/copying others

    • Jesse Laurin

      oh christ, down from 10 million sales to 9.5 million, declare bankruptcy!!!!

    • It’s Me

      No reason to declare bankruptcy, but a trend is a trend. Two quarters of consecutive YoY declines and missed targets is not a positive trend. No company wants to see that.

      For context, that $7.1 billion in an operating profit was down 26% from a year before. That is a massive decline in profits.

    • marorun1982

      Those are sales to providers… dont mean sold to clients..

    • It’s Me

      Absolutely. Samsung’s problem in the previous quarter was blamed on channel stuffing, so this is likely a continuation of that issue.

    • Columbo

      Lol, ok so the market is becoming more competitive. They’re still the #1 phone seller and they still made $7 billion in profit during this “bad” quarter. BTW you can look through my post history and see that I’m not a saumsung fan. But I’m not delusional either.

    • It’s Me

      That’s a significant decline over the year. A 26% drop in operating income isn’t something to ignore.

    • It’s Me

      Sure, but the question still is valid. If the rest of the market is flat or growing but Samsung is declining, which is that reported as “a slowdown in the overall smartphone market” ?

      Whether Samsung is doing just fine or not wasn’t question.

  • Jesse Laurin

    Samsung is selling millions of devices, this article is pointless

    • Jesse Laurin

      That’s because adding things like finger print scanners and heart rate monitors are useless features, they’re running out of ideas for phones..I bought the Note 3 for recording 4k video, and i dont regret it a single bit, going to take a lot to make me upgrade..

    • realitycheck

      the fingerprint scanner is much more convenient to have over lets say wireless charging.

    • MobiDude

      don’t impose your opinion on others. i value wifi charging.

    • marorun1982

      Dont need crappy wireless charging..

      But on a waterproof device i would like wireless charging to not have to always fool around taking of the lil thing in front of the charging port and risk breaking them and loosing my waterproofing..

    • Joseph

      Ya I’m with you the note 3 is the first phone in a long time I feel that there is really no need to upgrade for a few years now because of it

    • marorun1982

      Using an Xperia Z1 here and same dont feel the need to upgrade it at all.

    • mggOptimusG

      I would have chosen the S5 but my company does not allow the finger print scanner to be used as a security device so the feature is disabled.
      There is no FM radio, and to charge the damn thing you need to remove a flap. Did that on a Omnia2 and unless it has external pins like the Z2, there is waaay too much hassle.
      Rocking an G1 for a while now and still happy. Did not see the benefit of getting Note3 not the new ones yet. Maybe I will wake up one morning and get a craving for jumping in a pool with my phone, but that has not happened yet. ;)

  • AW Sudo

    Hey Samsung, how about you stop releasing a new phone or tablet every 6 months with new buzz word, gimmicky features and expecting consumers to shell out $500 to $800 per device? What is the difference from your S4 v S5, Note 2 vs Note 3, etc? Oh wait, i don’t care! I have my N5 at 1/2 the price, rooted, and receive updates very quickly… I want an affordable flagship phone with longevity in mind.

    No, you are not Apple — you don’t have devoted sheep. Touchwiz is nothing like iOS (besides recent incarnations iOS appear to be stealing Android’s ideas… *hint*). Tizen, wft is that?!

    • monsterduc1000

      It’s pretty obvious you don’t know much about phones if you don’t know the differences between an s4 ans s5, note 2 and note 3. Sure they look similar, but the internals and screens are much more advanced.

      It’s not Samsung’s fault if people are idiotic enough to get a new product of their’s every six months.

      So enjoy your terrible battery life, washed out screen and incremental updates that have had nothing really new to offer since 4.2…and all the phones you mentioned have 4.4.x and are some of the first phones to get them outside of the Nexus line anyway.

    • AW Sudo

      Haha… thanks for the information. I am fully aware of the differences and I was being cynical.

      Let’s not start the screen wars. FYI — the N5 has a superb screen. I rather have an update vs no update at all. Even though Google pushes the increment, it is still my choice to update or not. With Samsung, you can’t even get an update even if you wanted to…

      Totally agree with your second sentence!

    • monsterduc1000

      You must have missed the part where I said that every phone you mentioned has Kitkat…you know, the latest of the Android updates…so your argument for not getting an update is moot. Sure your phone had it a bit sooner, but the update from 4.3 to 4.4 brought next to nothing new. And if I feel my Note 2 needs something it might not have in one of the incremental updates, I can always root and custom rom it in about ten minutes, but it has been bulletproof since the day I got it so I have no reason to.

      I also noticed you didn’t disagree with my terrible battery life statement… :) N5’s is HORRIBLE!!!

  • JT

    Samsung was like Hyundai only a few short years ago where they provided an attractive package of technical specs and options on devices which undercut the prices of the big boys. Now, they are priced as the top dogs in the industry and no longer offer the allure of good value, which was the main premise and draw of their rapidly successful climb in the industry. You also couple that with the fact that they release devices, smartphones, tablets, etc. multiple times a year, then why would anyone buy a new product that doesn’t offer the great value when an improved product will come out in mere months? They are exactly like Hyundai in that sense where instead of waiting the traditional 7 years for a complete redesign of a vehicle (like the Hondas, Toyotas, BMWs, Mercedes, etc.) they do it every 4-6 years.

  • Sensualpoet

    Samsung builds very good mobile products and is a (the?) market leader across a variety of segments. But two strategies need refinement in order to boost profits and loyalty.
    1) Making a bazillion variations — choice is nice but Samsung could easily streamline what’s on offer. There is only so much shelf space … let alone “talking points” that can be retained in a sales reps head. Making fewer profits ought to boost margins.
    2) Software bloat — Samsung has not made the case with its customers for its myriad of apps, many forced on the user, and few actually explained. The benefits of embracing the Samsung world and having yet another account to manage has not been made to its own consumers.

    • WatDah

      I think you just missed an important aspect of what you said yourself. Samsung is at where they are BECAUSE there’s a bazillion variations. They will continue to do so because they know if they make fewer products, their sales will drop dramatically, since they don’t use better materials like other companies. Flooding the market with products is the only way for them to maintain their status, but unfortunately that is also coming close to an end, as they have just reported a bad Q2.

  • iPwn8599

    there’s always next quarter!