Samsung Mobile’s Plunge in Profit – Can the Company Make a Comeback?

Samsung has always been the leader of big smartphones, which are called “phablets” (a combination of a phone and a tablet) by many. They were the first to release the first “big phone”; while many thought that the idea of a big phone was a joke, things soon changed when Samsung started bringing in large amounts of revenue both into the United States and worldwide. The idea of a phablet finally caught fire and Samsung established itself as a household name.

Apple fights back strong with iPhone sales

Recently, Apple introduced a big change to their devices. In 2014, Apple released the iPhone 6 and 6 Plus, which changed both the playing field of the smartphone market, and Apple’s philosophy when it came to smartphone design. The number one reason that the average person buys a Samsung product is because of its large screen. Apple was not offering the screen size that Samsung phones had and this became an advantage for Samsung. Apple’s philosophy in the past has been make a small phone that fits in the hand, but as Samsung started growing, Apple had to take action. For the first time Apple went against their design philosophy and made a gigantic phone, the iPhone 6 Plus. This not only caught the attention of Samsung, but it also surprised many.

The phone was an instant success because having the “Samsung screen size” on a iPhone was something many people were longing for. Just 3 days into launch of the new phones, Apple had sold more than 10 million units in 10 different countries. Samsung could never pull of such a feat, as its own sales record was 10 million Samsung Galaxy S5 mobile phones sold over 25 days back in 2014. This commenced the fall of Samsung both in popularity and revenue. In fact, Samsung has been losing money ever since the release of the Galaxy S5 mobile phone.

With people becoming tired of Samsung’s lack of innovation and cheap phone quality, the brand was deteriorating. Samsung was not only losing to the likes of Apple, but also to smaller brands like Xiaomi, Asus, OnePlus, and Huawei who produce quality phones at half the price of Samsung Galaxy phones. One example being the OnePlus Two, a phone selling for only $380 compared to the $700 price tag of Samsung phones while still giving the same quality and experience.

Once the new iPhones came out, Samsung’s reign as “smartphone king” came to an end. Apple proudly took the throne and has been thriving ever since. The Cupertino giant has been growing every quarter of the year since the launch of the bigger phones, and Samsung has been losing profit every quarter of the year. The Samsung Mobile division reported a 64.2 percent drop in profit in the fourth quarter of 2014 after the release of the iPhone 6. This was a devastating blow that left Samsung with little hope.

Even after releasing their next flagship phones, the Galaxy S6 and S6 Edge, and with Samsung’s huge design change of shifting from plastic made phones to metal and glass-based phones (like the iPhone 4/4S), Samsung was still not making enough money. The idea of Samsung switching to a the idea of producing phones looking and feeling like iPhones did not help their profits.

Samsung Mobile in free fall

Continuing its loss, Samsung’s profits still could not match those of 2014 or 2013 as it launched into a free fall. The slumping sales of products meant long unheard of worker layoffs, and cost cutting for future projects. The only thing keeping Samsung afloat is its semiconductor and display panel business. Owe it to pure ingenuity, as the bulk of Samsung’s chip sales are actually to Apple, allowing the company to stay in business in even the toughest of times. Thanks to Apple iPhone processor shipments/sales, Samsung Mobile saw the first actual growth in profit in more than 2 years.

But again, Samsung Mobile profits slipped again in the first quarter of 2015 by 39 percent. It seemed like Samsung was done for and the comeback for the company was impossible. Soon after the release of their Galaxy Note 5 phone, a ‘halo device’ made solely to drive sales, phone product sales improved, but overall profit remained largely unchanged. Samsung can make a comeback, but it has to work hard at making people perceive them as better than Apple.

What MVHS students have to say

A survey of 30 Monta Vista students after the release of Apple’s newest phones, the iPhone 6S and 6S Plus, revealed that 43.3 percent of students own an iPhone, only 20 percent own a Samsung, and 36.7 percent of students own some other device. Likewise, when students were asked if they had a choice about which phone they could buy, 20 percent said they would get a Samsung while almost 26.7 percent said they would get an iPhone. The results may not be surprising because Cupertino is home to Apple’s headquarters and offices, and many students might have parents who work at Apple. However, it is interesting to note that the majority said they would get something other than a Samsung or Apple phone, despite the widespread popularity of these two phones. Still, these statistics show how Apple’s latest phones have appealed to many compared to Samsung’s latest offerings.

An unlikely comeback

Samsung has lost ground to both Apple and other to lesser phone companies. Even by making more quality phones, the Korean company still can not stop sinking. It is only a matter of time before the company does something extreme to turn itself around. At the rate that they are losing money, depending on Apple’s chip and display orders is not enough.

Samsung will continue to sell smartphones in decent numbers. There is no immediate threat to their existence. But, chances of a comeback for the Korean tech giant are slim. When a company becomes something no one wants to talk about, it has to have good reasons for a comeback. Samsung is losing most of its reasons.