Samsung’s holiday quarter wasn’t as devastating as the previous quarter, which saw the company’s profit plummet 60% on-year, but the company’s fourth-quarter report still showed steep declines in profit and revenue as Samsung continues its struggle to steady the ship. The South Korean giant has enjoyed explosive growth over the past couple of years, but pressure from Apple at the high end and from dirt-cheap Android phone makers at the low end has created a puzzle that Samsung can’t quite seem to piece together yet.
There is no question that the iPhone 6 and iPhone 6 Plus comprise a terrifying nightmare for Samsung, which has seen its high-end phone sales dwindle since the phones were released this past September. But as it turns out, Samsung’s biggest headache may lie elsewhere.
We have discussed how the company’s reinvigorated rivalry with Apple is causing Samsung some major headaches right now, but that’s only part of the story. As ZDNet pointed out in a recent post, Apple is hardly Samsung’s biggest problem right now.
While Apple is clearly enjoying some growth at Samsung’s expense, companies including Lenovo (and its Motorola brand), Huawei and Xiaomi are seeing big growth in China and it may pose an even bigger problem for Samsung. The bulk of Samsung’s smartphone sales are low- and mid-range devices sold in markets like China, and now rivals are making better, less expensive phones that are eating up the company’s market share.
According to analysts’ estimates, Samsung shipped 11.5 million fewer smartphones in the fourth quarter of 2014 compared to the same quarter in 2013. That trend is going to continue unless Samsung can find ways to respond to both Apple and the growing competition at the low end of the market.