Samsung’s smartphone sales drop in Q4 puts pressure on upcoming Galaxy S9 and S9+
For a company that’s seen a fair bit of turmoil the last couple of years, Samsung today reported relatively strong earnings thanks to its surging chip business. Fortunately for Samsung, that strength overcame a mobile handset business that remains in transition.
With less then a month to go before Samsung unveils its new flagship phones, it’s a reminder of just how much its mobile business will have riding on sales of the new Galaxy S9 and S9+, which are not expected to be radically different than last year’s S8 and S8+.
In its Q4 earnings release today, Samsung Electronics reported record results for the third straight quarter. Given a disastrous recall of exploding Galaxy Notes in 2016, and a scandal that saw its leader sentenced to five years in jail last year, that’s somewhat remarkable. Samsung said its profits were up 42 percent from the previous year, and revenue rose 23.7 percent.
However, while Samsung did not provide specific numbers, the company noted that: “Total smartphone shipments decreased due to the lineup optimization of low-end models, while shipments of flagship products, such as the Galaxy Note 8, increased from the previous quarter.”
In other words, Samsung has been a company traditionally focused on market share, selling a wide range of smartphones. But it’s been winnowing that lineup, particularly after a couple of rough years that saw it blown out of markets like China thanks to tough local competition.
Instead it is (once again) trying to follow Apple’s lead and focus more on premium phones with features that set them apart. Thus, increased sales of the flagship S8 are good news, even if it’s not enough to offset the overall drop in lower-end smartphones.
But if Samsung wants to lean harder on its flagship phones, that means the upcoming announcement of the Galaxy S9 and S9+ take on a greater significance. Based on leaks so far, it doesn’t appear that these will be dramatically different than the current flagships.
For its part, Samsung is optimistic that the new phones will still boost earnings.
“In the first quarter, the company expects the mobile business to improve its earnings, led by an increase in sales of flagship products with the launch of Galaxy S9,” the company said in its earnings report.
And it emphasized that going forward, “Samsung will continue its efforts to differentiate its smartphones by adopting cutting-edge technologies, such as foldable OLED displays.”
Samsung also said that this year “demand for smartphones is expected to rise thanks to growing replacement demand for premium smartphones.”
The company certainly has its fans. We’ll soon see if that loyalty will be enough to move the new Galaxy phones in sufficient numbers to boost Samsung’s new smartphone strategy.