Samsung’s troubles are far from over, says credit rating Fitch, predicting that the company’s share of the smartphone market will fall from 31 percent last year to 25 percent next year, reports the WSJ.
Nitin Soni, a Singapore-based director of corporate ratings at Fitch, warned that Samsung had lost its edge with consumers as Chinese companies like Xiaomi, Lenovo and Huawei make cheaper and cheaper products that meet most consumers’ needs.
He added that innovations like wearable devices and curved screens – two of Samsung’s recent tricks – are “unlikely to change the trend” …
Samsung Mobile recently reported a 31 percent slump in profits, with the division’s SVP Kim Hyun-Joon citing competition from Chinese low-end and mid-range handsets as a key factor. Xiaomi, Huawei and ZTE have all seen their share of the smartphone market increase over the past year.
Former Samsung employee and widely-followed Bernstein Research analyst Mark Newman agreed with the pessimistic forecast.
[Newman argued] in a note Tuesday that the company needs to execute “a drastic change in smartphone strategy,” [stating that] the company’s “disastrous set of results” last month was a “game changer” for the company, which needs to wake up to the idea “that protecting margins in the low-end is fruitless.”
Newman said that Samsung’s only hope was to use its size and resources to “become aggressive again,” suggesting that the company may need to further reduce its margins in an effort to compete on price.
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