@Samsung's Second Quarter 2015 Decline and Why Chinese smartphones attractive

“Despite the launch of Galaxy S6, improvement to earnings [from the first quarter] was quite marginal due to low smartphone shipments and an increase in marketing expenses for new product launches”

Samsung's Press Release declaring their earnings for the Second Quarter of 2015

Samsung just seems to be unable to catch a break.

The South Korean smartphone maker have recorded their seventh Straight quarter of profit decline in the Second quarter of 2015 as reported in the article “Galaxy S6 fails to bring back Samsung's mojo”, published July 29, 2015 by Shara Tibken, CNET News.

In fact, it's so bad that Samsung is planning to shave at least US$100 off the price of their Samsung Galaxy S6 smartphones both in the USA and UK as pointed out in my MICO Wars Blog article entitled “Motorola launches Moto smartphones to challenge the Apple iPhone 6S”.

So what does Samsung plan to do? Strike back with newer smartphones, possibly with smaller screens and running Tizen!

Samsung Unpacked Event in August 2015 – Apple defeat in Second Quarter of 2015 a small Consolation Prize

They also plan to introduce new premium, mid-range and low-end smartphone models, such as possibly a new Galaxy Note 5 and Galaxy S6 Edge Plus as well as an upgrade to the Samsung Galaxy Gear Smartwatch.

All will be revealed at a Samsung Unpacked Event set for Thursday August 13^th 2015 in New York City as reported in the article “Samsung sets Unpacked event for August 13 in NYC”, published July 27, 2015 by Jessica Dolcourt and Shara Tibken, CNET News.

At least they've managed to beat Apple to become the most popular smartphone maker in the Second Quarter of 2015 according to the sales stats from analyst Trendforce as reported in the article “Samsung tops Apple in slowing smartphone market”, published July 20, 2015 by Don Reisinger, CNET News.

  

This is confirmed by statistics from analyst Strategy Analytics for the same period as reported in the article “Samsung regains smartphone sales crown from Apple”, published April 28, 2015 by Steven Musil, CNET News.

So how bad was it that Samsung is now planning to reduce their S6 prices? Pretty bad, actually!!!

Samsung's Second Quarter Decline - Why Chinese smartphones are more attractive than before

First, a bit of historical perspective, as it wasn't always like this as declines in the sales of Samsung products began in the Third Quarter of 2014 as reported in my blog article entitled  “Samsung’s declares 60% Profit and 20% Sales decline - Tizen OS Response needed as India’s Diwali may Light a Path in November towards Future Prosperity”.

Before these declines, Samsung had posted five (5) consecutive Quarters of record profits, starting with the Samsung Galaxy S3, the smartphone that launched them to their status of king in the Smartphone world.

Samsung's Second Quarter of 2015 Balance Sheet isn't bad, really, as they’re profitable. But in terms of projections it falls below expectations from stockholders when compared to the Second Quarter of 2014:

1. 7.3% decline in sales to US$41.8 billion (48.54 trillion won)
2. 4% decline in Operating Profit to US$5.9 billion (6.9 trillion won)
3. 8% decline in Net Income to US$4.94 (5.75 trillion won)

Now, a sudden slowdown in the sales of smartphones is upon the smartphone industry, with even competitors such as HTC and Singapore, China-based Xiaomi declaring that their sales are being reported in the article “Smartphones aren't selling like they used to (it's an Android thing)”, published July 7, 2015 by Nigel Manuel, CNET News. 

Even Samsung's main global rival, Apple, has lost its dominance in the smartphone sales in Chianto rival Xiaomi based on figures from Research firm Canalys as reported in the article “Apple loses top spot in Chinese smartphone market to Xiaomi”, published August 3, 2015 by Lance Whitney, CNET News  and “Apple just lost its Chinese smartphone crown”, published AUGUST 3, 2015 by Jonathan Chew, Fortune. 

Industry wide smartphone Decline - Lack of innovation as Developing World and Western Invasion Progresses

Apparently, the new smartphones coming out aren't innovative enough for people to spend money to upgrade.

A bigger screen just can’t beat the lower price point for a similar quality smartphones, especially smartphones are slowly trending back towards a smaller size as predicted in my blog article entitled “Celebrities Return of the Flip Phones - Flip-Force Awakening Thanks to Fappening Herald Smaller Smartphones and Smartwatch phones”.

One such example is TCL Corporation's US$200 Alcatel OneTouch Idol 2 Mini now making a beachhead in the Caribbean in a push toward the United States of America as detailed in my MICO Wars blog article entitled “US$200 Alcatel OneTouch Idol 2 Mini is a Budget phone in Royal Metallic Robes”.

So many of these smartphone maker such as Samsung and Xiaomi are slowly making a push into Developing and Third World Countries in a bid to eke out some growth such as in India as reported in my blog article entitled “Xiaomi in India after success in China - Xiaomi Looks to the West as the World is theirs for the Taking”.

There's even an allegation that Xiaomi may be coming to the US of A and Caribbean sometime in early 2016, as they've already begun testing the waters with their online Mi Store in the US of A as reported in the article “If you’re holding your breath for Xiaomi U.S. smartphone sales, you might want to breathe”, published June 27, 2015 By Williams Pelegrin, DigitalTrends and “Apple's biggest rival in China says it plans to start selling phones in the US”, published July 16, 2015  by Steve Kovach, Business Insider. 

Samsung's Tizen growth expectations - How Profit sharing with Users will boost smartphone Sales

Samsung has managed to sell some 1 million Tizen based Samsung Z1 during the six (6) month period from January 2015 to June 2015 as reported in my Geezam blog article entitled “Samsung sells 1 million Tizen smartphones while seeking Developers”.

Encouraged by this small but steadily growing sales, they've recently announced at their Samsung's Tizen Developer Summit hosted in Bangalore on Tuesday 30^th June 2015 that they plan to use Tizen 2.3.1 instead of Android Wear as reported in the article “Samsung holds first developer summit for Tizen in India”, published 30 Jul, 2015 by ET Bureau, Economic Times of India.

The successor to the Samsung Galaxy Gear will have some new features ,including a cicular face and a rotating bezel, in keeping with Android Wear Smartwatches only with Tizen OS as reported in “Samsung Gear Roundup: New Smartwatch to Run On Latest Tizen OS, Have Rotating Bezel”, published August 3, 2015 By Sami Khan, International Business Times.

Samsung Tizen open doors for LiMo – How Profit sharing with customer will boost smartphone sales

So there is growth, just not for Google Android!

Thus I'm predicting that for smartphone to innovate, it might have to adopt untried, untested smartphone OS, such as Tizen and even the Mozilla Foundation’s Firefox OS through their Ignite Initiative as I'd predicted in my blog article entitled “Mozilla's @Firefox OS and the Ignite Initiative - Wearables, Hipster Trend as Three Chinese Dragons Dominate the Smartphone World”.

With 5G on the horizon in 2020 based on the ITU (International Telecommunication Union) 5G IMT-2020 Roadmap as reported in my blog article entitled “ITU publishes 5G IMT-2020 Roadmap - Why US Telecom Providers, @Digicel_Jamaica and @LIMEJamaica like to travel off the beaten Path” newer OS that allow regular users with no programming knowledge to partake of the App Economy will boost the sales of smartphones once more.

By supporting smartphone OS that adopt the Open Source LiMo (Linux Mobile) architecture, it will free them from a dependence on Google Android.

In a truly Open Source Mobile Environment, OS like Tizen and Firefox OS will make it possible for smartphone makers, Telecom Providers and end users (customers) to make money from the App Economy as predicted in my blog article entitled “Digicel and LIME's 4G LTE Adoption in Jamaica – Budget Tablets with Microsoft Productivity Software spark Wireless Broadband Revolution”.  

This was the original plan that the Telecom Providers had envisioned when they'd adopted 3G Internet on their Network. This is how Samsung can grow their smartphone sales, as by directly sharing profits with smartphones owners, they create an incentive to owning Samsung Products.