This might not seem surprising for some, but Samsung’s second quarter i.e. Q2 turned out to be rather disappointing for the South Korean giant with smartphones sales going slow.
Nobody expected this to happen this soon, but it seems as if we are in an era where Moore’s Law isn’t applicable anymore. With the newer smartphones really not offering a phenomenal growth in performance, people seem to be content with their older phones, which to be honest, still do the job quite well despite being old. Thus, fewer Samsung users have upgraded to the newer models, since they simply don’t need to.
This has affected Samsung sales to such an extent, that the rise in operating profit for Samsung was just 6 percent as reported by the company itself this Monday. This happens to be the lowest for Samsung this year. The one area where Samsung is still functioning well is their memory chips which have seen a 4 percent revenue growth, but only because they are in high demand for now.
The worrying thing for Samsung is their slow phone sales, which is a major source of revenue for them. Their newest Galaxy S9 and S9 Plus couldn’t really prove themselves as something different from their predecessors with just some minor changes here and there, hardly noticeable to some even. Because of this Samsung’s revenue has declined by up to 22 percent in Q2 and is currently down to $20.2 billion. Yes, it is still indeed a giant, but maybe time is up for such expensive giants, where companies like Huawei and Xiaomi have managed to capture a large market share for Android.
According to the company itself, “Market condition will likely remain challenging in the second half amid pricing competition and new product launches.” To counter slow sales, the company is reportedly decided to launch the all-new Galaxy Note 9 earlier than usual. There are other reasons too which have contributed to slow smartphone sales, and that includes the carriers not offering subsidies on smartphones anymore.
Another reason might be the fact that the top of the line or simply put flagship phones have actually become much overpriced than before. This has stopped people from upgrading or they just buy an equally good phone from another vendor offering the same performance and features, for instance, One Plus.
The smartphone giants need to slash their prices and offer totally new features, otherwise, this draught would continue.