Samsung loses ground as Apple readies to launch iphone 6
Samsung Electronics Co Ltd is losing smartphone ground not only to cheaper Chinese rivals but also at the high end to Apple Inc, a survey showed, in an ominous sign for the South Korean giant as Apple readies to launch its nextgeneration iPhone 6.
Samsung last week gave secondquarter earnings guidance that was far weaker than expectations and is on track for its worst quarterly profit in two years, a performance the company attributed in part to price competition and higher inventory levels in China.
Research firm Counterpoint’s survey of 35 markets accounting for nearly 90 percent of global sales found that sales for the eightmonth-old iPhone 5s stood at 7 million in May, compared with about 5 million for Samsung’s flagship Galaxy S5, which was in just its second full month of sales after a late March release.
Counterpoint said that the Galaxy S5 appeared to be doing worse than the Galaxy S4 had done in its early launch against the iPhone 5, with each selling about 7 million units a month. The data measure retailers’ sales to consumers as opposed to typical industry data that look at shipments made by the manufacturer.
Galaxy S5 sales probably remained at about 5 million units in June, said Tom Kang, Seoulbased analyst for Counterpoint. He said the Galaxy S5 fell short of market expectations in terms of display quality and by using a plastic case.
“They made one mistake, one product that didn’t hold up to expectations and they are paying the price,” he said in a phone interview. “They will have to move forward and leave behind what has failed and focus on the next product.”
The data suggests that Samsung’s problems run deeper than just the inventory buildup in mid-to-low tier devices that the company reported earlier in the month after disclosing weakerthan-expected second quarter guidance.
Samsung
declined
to comment on Counterpoint’s data or disclose shipment figures for the Galaxy S5, though a Samsung executive in April said that the new flagship device was expected to outperform its predecessor.
“We will strengthen our product competitiveness by reinforcing our premium brand reputation, powerful product line-up, and cuttingedge technology,” the company said in an email statement on Wednesday.
Data from research firm Canalys showed that Samsung’s market share in the first quarter of 2014 fell to 18 percent from 20 percent a year earlier, while the likes of China’s Xiaomi and Lenovo Group Ltd (0992.HK) made gains.
Analysts said Samsung’s new products such as the S5 did not offer enough to entice consumers to pay a premium over cheaper alternatives that were rapidly improving in quality.
“Most major smartphone brands worldwide are battling brand fatigue at the moment,” said Strategy Analytics analyst Neil Mawston. “Consumers love their smartphones but almost all hardware, software and apps now look, feel or cost the same.”