Although the tech giant recorded profits last year, it is clear that shipments are slowing as the market matures.
Earlier this week, Samsung Electronics Co Ltd released a quarterly earnings guidance that took many off guard in that the technology news that it revealed was considerably weaker than had been expected.
This report will have aligned it to experience the worst incomes it has seen in two years.
That said, this technology news has also thrown a shadow over the confidence that the industry had been maintaining with regards to the strategy that it had formed to be able to keep up against is cheaper rivals in China. Although this South Korea based tech company has expressed that it had experienced better business conditions within Q3, it is the slowing of market growth that is proving to be one of the largest hurdles that it faces.
The technology news also acknowledged the struggle with growing price competition at the low end of the scale.
Of course, the threat of the next anticipated iPhone from Apple is also not to be ignored. According to an IBK Securities technology analyst, Lee Seung-woo, “The earnings deliver a harsh reality check to Samsung that it is not Apple, but Samsung. Its strategy of selling phones at expensive prices will not work anymore, as Chinese rivals also offer good enough phones at much cheaper prices.”
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He went on to state that his recommendation would be for Samsung to take a good look at its smartphone strategy and review it quite carefully.
Although smartphones may have been the driving force behind record breaking profits in 2013, as the market rapidly matures, the environment as a whole is changing. The IDC research firm is now forecasting that after the global shipments saw a growth rate of 39.2 percent, last year, that will slow by quite a lot until it reaches 19.3 percent, this year. At the same time, the average sale prices are also predicted to fall.
Some technology news analysts are now saying that Samsung will soon be forced to cut back its prices in its mid- to low-tier mobile devices, where the market is currently seeing stronger growth, but where some of the biggest competition is coming from China.