Samsung profits down by almost a third as Galaxy lines flag

Samsung forecasts a 31% fall in profits in the first quarter after losing ground to rivals

South Korean technology and electronics firm Samsung has forecast a 31% year-on-year drop in profits to approximately 5.9tn KRW (£3.6bn) in its first quarter. Sales in the quarter to the end of March also fell by 12% to 47tn KRW, said Samsung.

Although substantially more than profit reported in recent quarters, and higher than the 5.3 KRW predicted by a poll of analysts conducted by Thomson Reuters, the decline from around 8tn KRW this time last year reflects poor performance around its flagship smartphone lines.

With Apple enjoying renewed success in the smartphone market following the release of the iPhone 6, Samsung has found itself left behind in comparison.

Indeed, according to recent statistics from analyst house Gartner, Samsung lost 10% of its market share in the final quarter of 2014 and was knocked from the top of the tree in terms of unit shipments for the first time in four years as a direct result of the Apple resurgence.

It has also been hurt by the growing importance of Chinese smartphone brands to the overall market.

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Samsung will now pin its hopes on the Galaxy S6 and S6 Edge lines, announced in March 2015 at Mobile World Congress (MWC) in Barcelona.

Its new models boast the world’s first 14nm mobile processor with 64-bit platform, a LPDDR4 memory system and UFS 2.0 flash memory; a 5.1in Quad HD Super AMOLED screen; five-megapixel front-mounted and 16-megapixel rear-mounted cameras; and WPC and PMA-certified wireless charging technology, which Samsung claims allows four hours of run-time after 10 minutes of charging.

The Galaxy S6 has so far received some favourable reviews but analysts have warned that it may not be enough to take back the top spot.

Speaking immediately after Samsung unveiled its new handsets at MWC, Forrester’s Thomas Husson said: “Samsung’s lack of software DNA will still prevent it from delivering truly differentiated service experiences like Apple.”

The Galaxy S6 goes on sale on Friday 10 April.

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Interesting. What Samsung continue to underestimate is the importance of the ongoing customer relationship (with consumers, not just business clients). Apple may be opaque, but they've got a very good handle on the consumer relationship. Samsung, with their handsets that go out of date within 12 months, really don't. I have a rather good Samsung Note that hasn't been sent any kind of system update for about three years. In fact, I've just installed CyanogenMod on it, out of sheer frustration (and it runs rather well, as a matter of fact). That's why Samsung experienced such a wonderful surge a few years ago (great phones) – and that's why they're now experiencing a steady decline (dreadful service). Although they're obviously still popular with their corporate customers, in view of the Apple chips they're still building!

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Bill,

I totally agree but it is the network providers that need to maintain updates for far longer and if they don't Samsung should offer users the chance to download a vanilla version of the latest release of Android or Tizen, and then they would seriously challenge Apple. They also need to work closely with Google and Microsoft to provide a more complete ecosystem and to enable users to dump all the crapware like S-Health.

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Absolutely. The crapware was a major reason for switching to CyanogenMod; memory problems forced me to uninstall most of my favourite apps from the Samsung version of Android.

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I have just upgraded my S4 to use Android 5 and all the crapware is back and I cannot use the playstore etc. O'h well looks as though I have to do a factory reset this weekend and start again! :(

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