Samsung struggling

Anthony Caruana
29 May, 2015
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Apple-Samsung-macworld-australia1In the recent listing of the world’s most valuable brands, Samsung’s rating dropped out of the top 10 with the brand now 17 percent less valuable than it was a year ago.

Market analysts Strategy Analytics says Samsung has 24.1 percent of the vendor market share for the first quarter of this year, while Apple had 17.7 percent. In the last quarter of 2014, the companies were running neck and neck. The trouble is, market share does not mean profitability.

Samsung has not been able to turn the increased market share into profits, as margins are very tight. Mobile earnings dropped by 42 percent last year on the back of heavy competition and it was forced to heavily discount unsold inventory. That pushed margins to lows not seen for five years.

Putting all that together, we get a picture of a company that can sell plenty of phones but is struggling to compete at the high end where profits are greatest.

Clearly, while the flagship Galaxy S6 helped with sales – that’s most likely why its market share bounced this year – the ability to maintain high margins right across its product range continues to be a challenge.

We’re expecting Apple to get a sales bump later this year when the next iteration of the iPhone hits the market. With many smartphone users on annual or biennial contracts, a sales bump is inevitable as customers look for an upgrade.

All of this points to some rocky days ahead for Apple’s main rival in the smartphone game.

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