Samsung Cutting Back On Smartphone Portfolio Bloat In 2015 To Cut Costs
Facing growing competition from low-end handset makers and a resulting reduction in overall sales and revenue, Samsung has decided to cut back the number of smartphone models it offers next year. Samsung says the move will lower costs and hopes the strategy will slow, stop, or even reverse the profit slide it's been experiencing as of late.
Robert Yi, head of investor relations for Samsung, noted that the company's margins from its mobile and information technology business dropped to 7 percent in the third quarter ended September, the lowest it's been since the end of 2008 before Samsung launched its first Galaxy smartphone. Previously, Samsung was enjoying operating profit margins north of 15 percent for 10 consecutive quarters.
It's been a rough ride lately for Samsung, which reported a 49 percent drop in its third quarter profit. Faced with the reality that it can't keep doing the same thing and hoping for different results, Yi said the plan going forward is to scale back the number of smartphone models by around 25 percent to 30 percent, though he didn't say which specific handsets are headed for the guillotine.
However, Yi did says that Samsung will "increase the number of components shared across mid- to low-end models, so that we can further leverage economies of scale," according to The Wall Street Journal.
Samsung is also planning to more aggressively purse the Chinese market where a surging Xiaomi is the No. 1 brand. If that name sounds familiar, it's because Xaoimi recently overtook Lenovo for the third place spot in global smartphone sales.
Robert Yi, head of investor relations for Samsung, noted that the company's margins from its mobile and information technology business dropped to 7 percent in the third quarter ended September, the lowest it's been since the end of 2008 before Samsung launched its first Galaxy smartphone. Previously, Samsung was enjoying operating profit margins north of 15 percent for 10 consecutive quarters.
It's been a rough ride lately for Samsung, which reported a 49 percent drop in its third quarter profit. Faced with the reality that it can't keep doing the same thing and hoping for different results, Yi said the plan going forward is to scale back the number of smartphone models by around 25 percent to 30 percent, though he didn't say which specific handsets are headed for the guillotine.
However, Yi did says that Samsung will "increase the number of components shared across mid- to low-end models, so that we can further leverage economies of scale," according to The Wall Street Journal.
Samsung is also planning to more aggressively purse the Chinese market where a surging Xiaomi is the No. 1 brand. If that name sounds familiar, it's because Xaoimi recently overtook Lenovo for the third place spot in global smartphone sales.
