It’s hard to argue the theory that the company selling the most smartphones is the one in a dominant market position, and Samsung has been selling an awful lot of smartphones.
However, as an increased number of manufacturers get into mobile, the industry tends to sell more phones, even if it means making less money on each unit.
A new report from Counterpoint Technology Mobile Research reveals that compared to a year ago, Samsung is selling an increased number of lower-priced phones, and making less money overall than the company was in 2014. Even though Samsung sold 84 million smartphones in Q3 of 2015 – more than Apple and Huawei combined – the share of those phones costing more than $300 dropped from 55 percent to just 40 percent.
A result of this the market share of phones costing under $200 from Samsung increased from 30 percent to 38 percent.
The market effect of companies like Xiaomi, Lenovo, and Huawei offering low-cost phones is that Samsung must compete with those manufacturers on price if the company wants to sell enough devices to turn a profit.
As you’d expect given these price constraints, Samsung this year has so far been unable to surpass the 10 percent profit margin the company promised its shareholders. With no end in sight for the smartphone price war, Samsung will likely have to try something new in order to shake up the market.
Source: Wall Street Journal Digital