Samsung faces weak mobile phone sales and declining smartphone ASP

Korean electronics giant Samsung is facing weak mobile phone sales and a declining smartphone ASP.

Samsung on Monday said it expects its Q3 2014 operation profit to dip 60 percent year-on-year to KRW4.1T or $3.8 billion.

Revenue of Samsung is expected to decrease 20.5 percent to KRW47T or $44 billion.

The Korean electronics giant blames weak mobile sales and a declining smartphone ASP.

With its efforts to differentiate via proprietary software / services running on top of Google’s Android often falling flat, Samsung has been losing share to Chinese OEMs offering aggressively-priced low-end and mid-range devices.

More recently, Samsung has to deal with the iPhone 6 and iPhone 6 Plus launch. Samsung is yet to bring out innovative products this year. Despite facing quality related issues, iPhone 6 Plus is selling like hot cakes in China.

The Q3 warning from Samsung comes on the heels of July’s soft Q2 numbers.

During Q2, the electronics major blamed mid-to-low end phone competition in China and Europe, a strong won, and higher marketing spend aimed at lowering phone inventories.

Samsung earlier said its tablet shipments fell more than expected due to a weak market, and mobile weakness had a spillover effect on internal display and chip sales.

Samsung to bring new tablets

In addition to pressure from Chinese brands Huawei and Lenovo, Xiaomi, which shipped 26.1 million phones in H1 2014 with an annual growth of 271 percent, is also a growing threat to Samsung.

Samsung has already warned that it is cautiously optimistic about Q3. Samsung earlier said it expects hardware refreshes to boost smartphone sales, and for display and memory chip sales to also rise.

Meanwhile, Samsung’s first budget Tizen phone may launch in India during the last quarter of 2014. At present, India is witnessing response to Google’s Android One OS platform.

Smartphone users in both China and India are gearing up to welcome the latest devices – iPhone 6 and iPhone 6 Plus – from Apple.

According to earlier media reports, Apple received 2 million pre-orders for the iPhone 6 in China.

After the Ministry of Information Technology recently delayed approval for the iPhone 6 to be sold in China, the gray market returned.

Aryan B
editor@gizmolead.com

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