Samsung Electronics, facing more competition from Apple and the rising Chinese star Xiaomi, is cranking up incentives for its Galaxy S5 to as much as US$600 in freebies to defend its place as the world's largest smartphone maker.
With the marquee device from the South Korean company making its debut in 125 countries today, customers will be offered PayPal vouchers, a LinkedIn premium account and at least four fitness-related apps. It is the first time Samsung has offered incentives for its top-selling S series.
Samsung is fighting to make its phones stand out in the market against new iPhones and up-and-comers in China such as Xiaomi and Coolpad. The strategy may force rivals to lift incentives or lower prices, meaning a potential profit squeeze throughout an industry that has seen the fall of once- dominant producers Motorola and Nokia. Already, Samsung’s operating profit has fallen for two straight quarters.
“Samsung must do whatever it takes to maintain its global consumer electronics leadership,” said Neil Mawston, director of global wireless practice for the researcher Strategy Analytics. “Previous failures like Motorola have shown in the past that once you lose your grip on the top spot, it is a very long and painful process to get it back.”
Shares of Samsung fell 1.1 per cent to 1.36 million won at the close of trade in Seoul. The benchmark Kospi index dropped 0.6 per cent.
The S5 features a 5.1 inch screen with a fingerprint reader, a 16 megapixel camera, a heart-rate sensor, water-resistant coating that can withstand 30 minutes at the bottom of a metre-deep pond and a back resembling dimpled leather. Today’s offering in 125 countries is the largest number of nations for a single Samsung mobile phone release, the company said.
The display is full high-definition on an active-matrix organic light-emitting diode, or amoled, screen. That 5.1 inch screen is bigger than the current S4 model, and the battery will last 20 per cent longer than its predecessor, Samsung said.
The new device enters a smartphone market where global growth is expected to slow to 6.2 per cent in 2018 from 19 per cent this year, the research firm IDC said in February.
Samsung expects S5 sales to reach 10 million units within 25 days based on pre-orders from global wireless operators, Seoul Economic Daily reported. Jini Park, a Samsung spokeswoman, declined to comment on the report.
While Samsung sold about one of every three smartphones globally last year, its Chinese competitors – Xiaomi, Coolpad, Huawei and Lenovo – gained traction and stalled some of its annual sales growth. Xiaomi expects its sales to grow five-fold to 100 million phones next year.
Samsung, Asia’s biggest technology company, rode an almost 10-fold increase in shipments from 2010 to 2012 to overtake Apple as the world’s biggest smartphone vendor. Last year growth slowed to 44 per cent as the S4 sold less than analysts estimated.
This week the company posted a 4.3 per cent drop in earnings, with operating income falling to 8.4 trillion won (Dh29.79 billion) in the three months ending in March, as stalling demand lowers prices for Galaxy devices and components.
Samsung shipped an estimated 63.5 million units of the S4 through February. That compares with 65.6 million for the S3.
Samsung does not disclose unit sales for its mobile phones.
The S5’s formal global debut is scheduled for today, yet consumers in South Korea were able to buy the device starting on March 27 after wireless carriers there defied Samsung so they could work around penalties imposed by the government stemming from illegal discounts.
The S5’s prepaid and discounted subscriptions include six months’ access to the Wall Street Journal, fitness apps, games and social networking.
“The Galaxy S5 was designed to offer consumers the most advanced tool to help improve their everyday lives,” said Shin Jong-kyun, the chief executive officer of the mobile division. “These new partnerships perfectly compliment this mission with a comprehensive offering of some of the world’s best mobile resources to suit people’s active lives.”
While Samsung’s S series remains the key product in its mobile phone unit, which accounts for two-thirds of earnings, the company has spread its focus to products including the Galaxy Gear smartwatch, a broader range of tablet computers and its first wearable device using the Tizen operating system.
Samsung’s Gear 2 and Gear 2 Neo smartwatches are available in 125 countries starting from today, the company said.
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