New Delhi : World’s biggest smartphone maker Samsung has seen a downturn in its fortunes this year, marked by stagnant sales in its mobile business. Now, a Wall Street Journal report has claimed that Galaxy S5 sales were 40% lower than Samsung’s expectations.
The WSJ report says that Samsung sold 12 million units of Galaxy S5 in the April-June period, compared to 16 million unit sales of Galaxy S4 in the same time frame a year earlier. It says Samsung produced 20% more stock of Galaxy S5 than that of its predecessor. However, the lower-than-expected sales of Galaxy S5 led to “merchandise piling up in warehouses” and forced Samsung to spend extra on marketing to sell the units.
In China, its biggest market by revenue, the South Korean company sold 50% fewer Galaxy S5 units during the first six months that the model was on sale compared to that of Galaxy S4. In fact, Samsung sold more Galaxy S5 units than those of S4 in only one country — the US, which is incidentally its biggest market.
The report does not give any data on the sales post June. However, it is unlikely that Galaxy S5 sales would have increased much since then considering the market as well as official prices of the handset have been on a downward spiral. In India too, Samsung has given two official price cuts to Galaxy S5 within one month. Launched at Rs 51,500 in April, the top Samsung smartphone of 2014 now costs Rs 34,900.
Samsung also seems to be focussing on newer products, like Galaxy Note 4 and Galaxy Alpha. Leaked details of Galaxy S6 also suggest that it has shifted its focus on the next-generation model. The company is facing heat from the likes of Xiaomi and Motorola at the lower end of the price spectrum, while Apple continues to squeeze it at the top end.
The South Korean giant has seen its third-quarter profit decline by as much as 60% this year. The contribution of the mobile division in the global profits hit a three-year low during this period.
The WSJ report also says that the Samsung top management will soon see a reshuffle, with mobile head JK Shin losing his co-CEO position. The report suggests that the company is set to shuffle its mobile business executive team. Under the expected changes, another co-CEO BK Yoon, who currently heads TV and home appliances business, may also head the company’s mobile division.
