Even an year after tidying up its smartphone lineup and ditching plastic for metal in its high-end smartphones, Samsung seems to be struggling in bringing back its once stellar profits, which is clouding the company's growth outlook. The world's largest smartphone brand (by marketshare) is expected to showcase its first profit increase in two years, but the smartphone profits are expected to shrink on a sequential basis.
The company's showed good efforts by launching new devices focussed for markets like India and continuously dropping the prices of its flagship devices, and that resulted into increased earnings. However, these steps have failed to be good enough in reigniting the growth in the smartphone business and regaining market share from Apple. The company is facing tremendous competition from Apple in the high-end and Chinese brands in the lower-end smartphone segment.
As competing with Apple on the basis of price is proving to be tough, the company is trying to lure consumers on the basis of design and features like Samsung Pay, which cannot be easily replicated by less technologically strong competitors. Samsung Pay, the company's competitor to Apple Pay and Android Pay, has garnered a fair amount of interest. Samsung has even announced a seven-day tour to celebrate Samsung Pay's launch in the US.
Even though brokerage firms are expecting Samsung to report a rise in its smartphone shipments, the mobile division's operating profit is expected to fall to 7.7 percent due to greater sales of lower-end devices and price cuts for the Galaxy S6. On the other hand, the company's semiconductor business will remain as its strongest performer and top earner for fifth straight quarter. The company not only makes storage and RAM chips, but also supplies SoCs for brands like Apple.
