There has been a shift to more mobile sales than PC sales in the global device segment. According to Gartner, this shift has come despite the stability in PC sales and cooling of the tablet market. In fact, tablet sales are expected to reach 320 million units by 2015, whereas PC sales will be at 316 million. Further, mobile phones are expected to increase 3.1%, reaching total sales of 1.9 billion units in 2014. Out of this, 1.16 billion units will be Google Android and Apple iOS would be at 333 million units.
Therefore, it is clear that mobile phones have become an important part of customers’ lives, especially Google Android phones. Out of all the mobile device players, Samsung (SSNLF) is the largest and the leading mobile phone retailer. It holds the largest market share and is somewhat ruling the market. However, there are plenty of challenges which the company is now facing, because of factors such as intense competition from new players and slowing market growth. Let us get into the details.
- Warning! GuruFocus has detected 6 Warning Signs with SSNLF. Click here to check it out.
- SSNLF 15-Year Financial Data
- The intrinsic value of SSNLF
- Peter Lynch Chart of SSNLF
Competition gets tougher
Samsung not only faces competition from Apple (NASDAQ:AAPL), but also from Chinese phone manufacturers. These companies offer phones at conveniently lower prices, attracting cost conscious customers. However, Samsung lacks variety in this segment and mostly enjoys popularity in mid to higher segment mobile phones.
Further, Apple’s next iPhone is also a threat to the smartphone retailer since it will attract most of the customer attention. This is mainly because of Apple’s popularity customer base. Also, it is announced that Apple’s suppliers in China will be going in for mass production of bigger iPhones, which will have a screen size of 5.5 inches.
This move by Apple might hamper Samsung’s sales, which is popular among customers for its large size screens. For instance, Samsung’s Note has a screen size of 5.7 inches.
What is Samsung doing?
However, the smart phone maker is also up with a large number of moves which should be helpful in coping up with competitive pressures. Firstly, it has a new range of products expected to be launched in the coming months. This new smartphone lineup should flood the market with a variety of new phones in all ranges, in order to cater to all kinds of customers.
Additionally, Samsung’s new Note 4 is expected to hit the market in September. This new launch should also help in boosting its sales as customers are awaiting its launch.
Moreover, the company is planning to reduce its marketing costs by cutting down on its promotions. This will help the retailer in lowering its costs, resulting in competitive prices for customers.
Samsung Galaxy S5 has also proved to be successful after it was launched recently, in a move against Chinese rivals. The phone has a 5.1 inch screen and was sold for an attractive price of $600. This resulted in record sales of 10 million units in the first month of its release.
Should race ahead
Hence, Samsung is strategizing well and its efforts have been quite fruitful in combating competition. Its expected launches should lure customers once again to its stores. However, Apple’s next iPhone launch still remains a threat to the retailer. It will be interesting to see how Note 4 fares against the iPhone during the year. Till then investors should keep their eyes glued to this stock.