Of the hundreds of Android smartphones that have launched since the mobile platform first debuted in 2008, Samsung’s most recent flagship phone, the Galaxy S4, sold the best. The flagship phone quickly became the fastest-selling Android device of all time and Samsung went on to ship 40 million units in six months. Unfortunately for the company’s share price, analysts were expecting sales to be even better, so Samsung ended up missing expectations. But it’s not just analysts’ estimates that are hurting Samsung’s stock — the company reported unaudited results for the holiday quarter that saw profit dive 18% compared to the year-ago quarter.
According to CNNMoney’s Adrian Covert, Samsung’s strategy is failing. He calls Samsung’s flagship Galaxy S4 a “disappointment in every regard,” from design and specs to sales. He says the battle over specs has ended, and Samsung now needs to look elsewhere to ensure that its Galaxy branded smartphones remain appealing.
“Every other smartphone maker, meanwhile, was able to produce a phone that was just as fast, powerful, and capable as Samsung’s top smartphone — with a higher quality design and better system software,” Covert wrote. “Suddenly, there was very little to distinguish Samsung from the pack.”
It’s clear that Samsung’s growth has slowed, but some might argue that it has more to do with market saturation in many regions than increased competition at the high end from Samsung’s rivals. In the last reported quarter, Samsung shipped more smartphones than all of its top rivals combined, including Apple.
Meanwhile, competitors like LG and HTC are seriously struggling — each vendor’s high-end flagship phone flopped big time in 2013. Any growth enjoyed by Samsung’s Android rivals has been at the low end.
But growth is indeed the name of the game and Covert is correct in that regard; Samsung’s earnings haven’t shown that the consumer electronics giant is in a position to see sustained growth.
“Samsung needs more than just marketing hype,” Covert writes. “Consumers have caught on that many of the flashier features in Samsung’s products are just that – flash. Its products now need substance that make it more than just another high-end Android phone in a sea of high-end Android phones.”
Right again, but continued or even accelerated growth of the firm’s low-end smartphone lineup may be even more important than the Galaxy S5 and Note 4’s success this year. But in any case, 2014 is undoubtedly going to be a hugely important test for Samsung.