Samsung on Thursday reported its weakest third quarter results in two years as it faces stiffer competition in the mobile and tablet markets.
The South Korean manufacturer’s net profit fell 49 per cent to 4.1 trillion won (Dh14.27bn) in the third quarter, but it “cautiously expects” an increase of 40 per cent for the fourth quarter.
“Although Samsung is launching products in every price segment, it is facing tough competition from all sides,” said Nabila Popal, research manager for the Mena region at International Data Corporation (IDC).
Chinese manufacturers including Huawei and Lenovo have taken a chunk from the market share of Samsung’s mid-segment range of devices, while many of the company’s Galaxy Note customers have defected to Apple’s iPhone 6 Plus.
“The landscape is completely different from what it used to be a few years ago when Samsung dominated the market. In addition to competition, it is the opinion of many players in the industry that Samsung has too many models and too many variants of each model, which has resulted in a loss of brand value among customers,” said Ms Popal. “A Samsung model launch is not therefore as valuable as an Apple model launch.”
Samsung’s share of the global smartphone market stands at 23.8 per cent, down from 32.5 per cent last year. Across the Middle East and Africa, its share of the mobile market dropped to just under 50 per cent at the start of this year from nearly 60 per cent at the start of 2013, according to IDC, and is continuing to drop.
The decline has been partly offset by stronger GCC sales of Samsung’s televisions and home appliances.
“Sales have been fairly strong for us,” said Ashish Panjabi, the chief operating officer at Jacky’s Electronics, which operates the Samsung brand stores in the UAE. “We recorded fantastic numbers in October. The launch of the Note 4 gave a spike to sales and the larger sized Ultra HD TVs continue to do well.”
The retailer Plug-ins has also witnessed growth for Samsung.
“Samsung is doing well for us, its premium TV panel business is doing extremely well as have the home appliances like the fridges,” said Sean Conner, the general manager at Plug-ins. “On the mobile and tablets side, it continues to do well, but I guess with all the releases, there has been a bit of a slowness around the supply chain.”
The smartphone segment remains the biggest contributor to Samsung’s revenue. Worryingly, the segment’s third quarter profit declined 73.9 per cent to 1.75 trillion won.
“Unless Samsung does something completely out of the box again and trendsetting like it did at the time of the first Note launch, I don’t see Samsung’s market share returning to previous proportions,” said Ms Popal.
thamid@thenational.ae
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