Over the last few years, Samsung has managed to establish itself as one of the biggest smartphone vendors in the whole world, but new developments could be troubling for the Korean giant. After reports that its profits were down, news broke on Monday that Samsung has been dethroned as thelargest mobile phone vendor in India by Micromax.
We also reported that Xiaomi has now become thelargest smartphone vendor in China ahead of Samsung. According to a comScore report Apple still retains the lead in smartphones sold in the United States, ahead of Samsung.
India, China and the United States are all highly significant mobile markets today, for different reasons. These changes could spell a lot of trouble for the company across all levels of the smartphone segment. It's not all doom yet though - an IDC report said that Samsung shipped more smartphones in Q1 2014 than the next four vendors - Apple, Huawei, Lenovo, and LG - combined.
Since then though, Xiaomi in particular has grown fast, and has taken the number five place on the list from LG.
At the global level, Samsung's scale is still impressive and nearly unrivalled - but this could well become a problem for the company, as it competes at all levels of the market. Since Samsung has "premium" handsets that are as expensive as Apple's iPhone, the brand's mid-range products can't effectively compete with the likes of Xiaomi or Micromax, who have both been releasing phones whose specifications give Samsung's upper-tier devices a run for their money, but are at the same price as Samsung's "mid-range" products.
And if Samsung starts to react to local developments like Micromax or Xiaomi, it ends up having a global effect - because of the huge number of products that Samsung has in such a large number of markets. Samsung can't really do anything about the number of markets that the brand is active in, but it does have the option of trimming its product line-up, to enable it to respond more actively to local changes.
This is something that is only going to become more important as time passes, because what we are seeing today is that the pace of development in the smartphone market is slowing down. Some months ago, expecting the performance of phones to seemingly double with each new generation wasn't unrealistic. While gains are still being made, they are not at the same breakneck speed, and that means that the way people buy phones is also changing.
With fewer products to juggle between, Samsung would also have more flexibility to set prices as per the needs of the market, without having to worry about a giant pyramid of products. Today, if Samsung adjusts the pricing of one product, it kills the positioning of three others. This is a real problem, and one the company needs to address, regardless of the tactics it decides to adopt to deal with the changes in the market.
It is still far too early to write off Samsung as a force in the market - being the second most popular brand in three of the biggest markets is not exactly a disaster, and it is still the biggest brand globally. However, one way or another, Samsung does need to react to a changing global scenario, and it needs to start moving quickly again, instead of getting trapped in plans and product lines which were formulated before many of the brands which are disrupting its business even existed.
No comments:
Post a Comment