What’s Next for Samsung and Its Flagships?
If we were to say that the Galaxy S6 was a leap of faith made by Samsung, we wouldn’t be too wrong. After all, the device marked a definite change in how Samsung perceived the market and its own place in it, as it stood amongst the signs of decline which started with the critical reception of the Galaxy S5.
To recap, the Samsung Galaxy S5 was criticized heavily for feeling more like a toy, rather than a premium flagship device representing the top notch research and production capabilities of Samsung’s Mobile Division. While the device was a good performer capable of holding its own as far as specs goes, the design and overall feel of the device felt like a regression when viewed in front of metal honchos like the HTC One M8 and glass wizards like the Xperia Z3.
This prompted Samsung to take steps to improve upon the feel of its devices. It started focusing more on metal and glass, ditching polycarbonate plastic and all its accompanied pros and cons for being used on the exterior of the device. The result? A Samsung Galaxy flagship was produced, that looked more like an iPhone rather than a successor to the Galaxy S5. Even on the software front, TouchWiz was put on the treadmill to get a less bloated software experience.
Reception for the Galaxy S6 has mostly been all-praise. The glass on the device lends a sense of fragility and luxury, while videos claimed that the flagship duo (Galaxy S6 and Galaxy S6 Edge) could still survive some decent beating. Even TouchWiz was unanimously agreed upon to be an improvement this time, albeit a marginal one. Needless to say, Samsung was all pumped up for seeing how much of an improvement the Galaxy S6 (and Galaxy S6 Edge) would do to its market share.
Unfortunately, things may not have been as smooth sailing as Samsung would have wished for. As reports came in for the second quarter of 2015, it was revealed that the Galaxy S6 was not performing as well as Samsung expected. “Total sales of the S6 and S6 Edge during Q2 2015 were below expectations“, as Park Jinyoung, VP from Samsung’s Mobile Communications Team was quoted as saying.
Samsung’s official statement also tries to explain the situation:
“Despite the launch of Galaxy S6, improvement to earnings was quite marginal due to low smartphone shipments and an increase in marketing expenses for new product launches.”
The statement isn’t directly talking about the shipments of the Galaxy S6, but rather of a drop in shipments overall across the Samsung smartphone lineup, aggravated by the older middle and low end models. The Galaxy S6 and S6 Edge infact had “increased shipments” if the official statement is to be believed.
While the information from the official statement sounds contradictory to the statement made by the VP, the difference lies in the wordings. The “sales” of the S6 were below expectations, while they had increased “shipments“. If we are being technical about it, shipped quantities would refer to the units transported to retailers for selling, while sold quantities would refer to the number of units actually making its way to the hands of the final consumers. For the purposes of calculating revenue and Quarter-on-quarter differences, the figure that matters for a manufacturer is the shipped quantity.
“Although revenue increased, profits increased marginally QOQ, due to supply difficulties from higher than expected market demand for the Galaxy S6 edge, as well as increased marketing expenditures that typically accompany flagship product launches.”
Samsung’s report also forecasts a slow down on the growth rate of its smartphone market share. To combat this, the Mobile division is expected to cut down the price of the Galaxy S6 and Galaxy S6 Edge.
“The Mobile Business plans to firmly maintain its sale of premium smartphones by flexibly adjusting the price of the Galaxy S6 and S6 edge, and launching a new model with a larger screen.”
The business report did confirm the imminent launch of the Galaxy S6 Edge Plus. The move is a direct target to the audience who prefers the iPhone 6 Plus and its phablet dimensions, and was expected from Samsung as it was amongst the first ones to successfully popularize the phablet with its Note series.
Even within the S6 flagship duo, Samsung had predicted sales of 3 regular S6 for every S6 Edge sold. Instead, demand for the curved form factor exceeded Samsung’s expectations. So Samsung opting for a larger display S6 Edge seems like a calculated decision, seeing as to how the Galaxy Note 5 could serve as a replacement for a regular Galaxy S6 Plus.
A price cut for the Samsung Galaxy S6 and the S6 Edge seem like a sensible decision considering how the phones were targeting only the top tier of smartphone buyers. Bringing down their prices would help keep their sales on par, while the then vacant slot for “expensively premium” product could be handled by the combined might of the Galaxy S6 Edge Plus and the Galaxy Note 5.
Targeting a lower price segment would also increase the scope of the current flagship, bringing it on par with the competition and overall deal they provide with the help of freebies. If the new price is significantly lower, it would also eliminate the need for a upper mid segment product as the Galaxy S6 and S6 Edge would fit the roles rather perfectly thanks to their extremely competitive hardware.
All in all, Samsung has realized that the smartphone market has drastically changed from its Galaxy S2 days. Adaptation and creative thinking is currently what is needed to survive in the market. That, or a silver fruit logo.
Let us know your thoughts on Samsung’s decision to cut prices of the Galaxy S6 and Galaxy S6 Edge in the comments below!