All of the sudden, Samsung Electronics’ line of Galaxy phones is looking less stellar. The Korean company is the global market leader in smartphone sales. But its shares are down 10% since J.P. Morgan warned earlier this month that the company has cut component orders for the Galaxy S4 on disappointing sales.
Samsung may now ship just 7 million of the top-end phones per month this quarter, analysts say. That’s still well above peak sales for the earlier S3 model of around 6 million per month. But analysts previously estimated S4 shipments of around 10 million.
The broader worry about Samsung’s phones, though, is that they are backed by Google’s Android operating system that can be used by all handset manufacturers. That makes it tough for Android phone makers to differentiate their devices.
For the past couple of years, Samsung’s phones have been popular thanks to large screens and aggressive marketing. But reviewers have not warmed to new software functions meant to set the S4 apart, like being able to control the screen by waving your hand over it. It’s too early to tell how consumers will take to other new versions of the phone that will be waterproof or include a large, zooming camera lens.
With about three-quarters of Samsung’s operating profit coming from the division that makes mobile devices, there’s no getting around the fact that a drop-off in smartphone sales would be punishing.
In Samsung’s defense, though, the company is not just a mobile phone maker. Samsung manufactures components like displays and memory chips too. That should also help Samsung withstand margin pressure if commoditized smartphone prices fall. According to IHS iSuppli, 63% of the S4
Samsung may now ship just 7 million of the top-end phones per month this quarter, analysts say. That’s still well above peak sales for the earlier S3 model of around 6 million per month. But analysts previously estimated S4 shipments of around 10 million.
The broader worry about Samsung’s phones, though, is that they are backed by Google’s Android operating system that can be used by all handset manufacturers. That makes it tough for Android phone makers to differentiate their devices.
For the past couple of years, Samsung’s phones have been popular thanks to large screens and aggressive marketing. But reviewers have not warmed to new software functions meant to set the S4 apart, like being able to control the screen by waving your hand over it. It’s too early to tell how consumers will take to other new versions of the phone that will be waterproof or include a large, zooming camera lens.
With about three-quarters of Samsung’s operating profit coming from the division that makes mobile devices, there’s no getting around the fact that a drop-off in smartphone sales would be punishing.
In Samsung’s defense, though, the company is not just a mobile phone maker. Samsung manufactures components like displays and memory chips too. That should also help Samsung withstand margin pressure if commoditized smartphone prices fall. According to IHS iSuppli, 63% of the S4