Samsung’s Q2 2018 Profits May Decline Due to Competition, Lack of Innovation
Jul. 4, 2018According to a report fromReuters, despite running a highly profitable chip business, thedisappointing smartphone shipment figures have taken a toll on Samsung’s cumulative operating profits, but that’s just one of the many reasons hurting the Korean giant’s finances.
Analysts have predicted that Samsung’s smartphone shipments will drop in the April-June quarter, primarily because consumers are gravitating towards cheaper and much better-specced offerings from Chinese brands such as Xiaomi. Moreover,a lack of technological innovation in the domain of smartphones is what is pulling away customers from Samsung, with a prime example being Apple with the Face ID technology, and Chinese companies like Xiaomi, Oppo, and Vivo which keep experimenting with new ideas.
“Functions (that) Samsung’s mobile phones have are not attractive enough for customers to spend more money on”,Song Myung-sup, an analyst at HI Investment & Securities was quoted as saying by Reuters. Analysts have made an example out of Samsung’s Galaxy S9 flagship, which despite offering top-of-the-line specs, lacks in the department of innovation and does not offer something truly unique.
A Counterpoint analyst added that Samsung’s reliance on traditional distribution channels to sell its smartphones is also a drawback, as competitors like Xiaomi have adopted a predominantly online sales model to bring down accessory costs and offer devices at competitive prices which undercut Samsung’s offerings.
