Samsung third quarter results came in and they were not pretty at all. Profits tumbled 74 percent year over year. Samsung also reported a 60 percent drop in operating profit. And a 20 percent decline in revenue in September.
For the past couple years there have been two clear frontrunners for the best selling handsets — Apple’s Iphones and the Samsung Galaxy S5 line.
According to the Financial Times, the reason for the dramatic dip in Samsung profits was because consumers held off buying Samsung phones in anticipation of Apples launch of the Iphone 6 and Iphone 6 plus. These two Apple phones were directly competing with the Samsung Galaxy S5 and the phablet sized Samsung Galaxy Note 4. I was definitely one of those people who held off buying the Samsung Galaxy s5 for one of the new Iphones.
I actually loved my Samsung Galaxy S4. And the idea of switching from android to IoS made me uncomfortable.
But…I loved the idea that Apple was launching the AppleWatch early next year. And I knew that the AppleWatch would only be compatible with the Iphone. So I jumped off the Samsung bandwagon and joined the Apple Bandwagon.
According to the Apple Website, sales of the Iphone 6 exceeded 10 million just three days after its launch on September 19, setting a record for phone sales.
Just to show how successful the Apple Iphone 6 launch was – supply for the new iphones was so much less than demand, that people were turning to ebay scalpers to buy their iphones without having to wait. People were paying $3050 on ebay for two of them!
I definitely wasn’t willing to pay scalper prices for my Iphone 6 Plus. So ended up waiting a month before i was able to get mine, even though I pre-ordered my Iphone to get an early place in line.
But just out of curiosity, while I was waiting for my IPhone to get to me, I wanted to see just how hard it really was to get the Iphone 6 Plus. So I walked into the Apple Store and was promptly told there were no Iphone 6 or 6 pluses in stock. I then went to my local TMobile store, and was told with some slight compassion, ‘Sorry, No’. Anywhere else I went asking for an Iphone 6, I was met mostly with laughs or with answers like we haven’t gotten any new Iphone 6s since our first batch sold out.
Getting back to Samsung. Well, they tried their best to stifle the demand for the new iphones, releasing a series of ads mocking Apples new plus sized phone and the announcement of AppleWatch.
Samsung also created an ad referencing a Steve Jobs quote about how the iphone was the perfect size because you could use it with only one hand, while boasting that Apple was merely copying what they had already done.
Samsung also mocked the Apple Watch by claiming it had already released its own range of smart wearables, with the Galaxy Note 4 and Gear S smartwatch
WELL these ads, CLEARLY haven’t been working well. According to CNET, Apple has been churning out 140,000 Iphone 6 pluses a DAY and 400,000 Iphone 6s a DAY. And still, supply has not been able to meet demand.
And now back to the issue at hand. Samsungs profits have tumbled and are snowballing downward. Apple has forced change withing Samsung’s smartphone strategy and business model. This came in an announcement this week in which Samsung would be releasing two new phones The Samsung Galaxy A3 and the Samsung Galaxy A5.
What’s different about these phones is that they are most likely going to be aggressively priced. Their specs are more midranged. Although they are still solid quality. But basically with the announcement of these two new phones, Samsung is saying they cannot compete with Apple in the high end range game and so they are going after the mid range market. They will have to compete by lowering prices and without sacrificing quality. They will continue to sell their flagship Samsung Galaxy s5 and Galaxy Note 4 but they will likely rely less on those models and more on the lower priced models.
Meanwhile, the amazing sales of the IPhone 6 guarantee a happy holiday season for Apple.