
Samsung Electronics forecasts 60% fall in quarterly profit - davidbarker
http://www.bbc.co.uk/news/business-29516806
======
yongjik
One tidbit not mentioned is that Samsung's Emperor Lee Kun-hee is in a coma
(most likely brain-dead) for several months, and his son is not officially the
Emperor... I'm sorry, I mean the _CEO_ of Samsung group yet, because Lee the
father is not officially dead.

So, many mid- to high-level managers in Samsung could be postponing highly
visible projects until the new leader steps in and clears up which way the
company will be heading. (I once heard, from someone in a different Korean
company, that there are implicit agreements to not be "too good" on the book
in such a situation: if your company does just as well when the beloved leader
is on bed / in prison / whatever, then the leader might not be the reason for
the company's success. Can't have that.)

~~~
zo1
I don't understand the Emperor and 'beloved leader' references in your post?

~~~
widdershins
I suppose it's just a reference to the absurd deference which leaves him as
CEO with no replacement when he's in a coma. And the fact that his position
will be inherited by his son, no questions asked.

~~~
gpvos
Apparently there are _some_ similarities between North Korean and South Korean
culture (which is not very strange, since the border between them is an
accident of recent history).

------
jonnathanson
It's a side note in this article, but those unfamiliar with Xiaomi should do
some light reading on the topic. It's a controversial company that publicly
aspires to be the "Apple of China," and is often accused of simply ripping off
Apple designs. My hunch is that we'll hear a lot more about Xiaomi in the
American press in the next few years, even if in passing, and just as a
curiosity.

Xiaomi is not the only reason Samsung's been hurting. But its dirt-cheap
pricing strategies have taken a serious bite out of Samsung's position in the
crucial Chinese market.

~~~
ww520
Xiaomi just overtook Samsung's market share in China. It sells cheaper priced
phones with similar specs. Samsung's margin was hurt because of that. Xiaomi
is expanding internationally. Samsung's margin will be further eroded.

It's like the war of the clones back in the PC days, where Compaq the clone
leader was cobbled by other better priced clones when all the clones had
essentially the same feature.

~~~
bhouston
My prediction: Xiaomi is only two years away from a serious entrance into the
North American or European market and that entrance will be very disruptive
for the existing market players, just like it has been in other markets that
Xiaomi has entered.

~~~
seanmcdirmid
Xiaomi can't really enter western markets until its designs are more original,
otherwise they would be sued out of existence. It will be interesting to see
if and how they manage that transition.

Also, Xiaomi is not a very good value. Meizi provides better quality for a
similar price if you are into the low end.

~~~
NicoJuicy
Xiaomi releases models in Europe...

------
Htsthbjig
I believe we are confusing lots of things here.

Profit isn't everything. Samsumg electronics is investing in semiconductors
and also in OLED screens production.

I see OLED as the future and just Samsumg and LG investing on them.

OLED are very expensive today because there is no mass production of them, and
because they are so expensive nobody buys them on TVs as they have hi def LCDs
way cheaper.

It is catch 22. I for one am waiting for OLED TV prices to be reasonable to
buy 4 of them.

Samsumg has a very good position as he is using the phones and tablets market
to start mass producing OLED panels.

When people change to OLED, and they will(because it is amazing tech), Samsumg
will have a big advantage.

~~~
headShrinker
I disagree. Customers will buy OLED simply because the price is right in
comparison to other options. Consumers don't want 2k, 4k, OLED, bend-y screens
or anything else, which is why OLED is not emerging. Distributers want 2k and
4k so they can sell licenses to previous license owners. (Maybe mobile device
manufacturing wants OLED for battery efficiency but it's not a huge power
savings anyway.) There are also a number of technical hurdles that become
pronounced on OLED screens as big as 50". Polls indicate consumers are quite
happy with the current LED LCD HD at the associated price point.

A perfect example is the average consumer doesn't even know what OLED is or
what benefits it offers. The fact that you do, means you are not average, and
are not considered as the majority buyer group. In fact, the benefits OLED
offers, the customer already thinks they have, because screen manufacturing
sales lingo is so completely f-ed up. The current top of the line HD LED tv is
not backlit. Its edge lit. I did extensive research only to find out actual
backlighting, what they call "active matrix backlighting" is only on LED TVs
starting around $7k to $15k. All this is an example of 'here is the newest
best technology that you need to have'. The bad news is, the customer just
spent 2k on a big ass TV 3 years ago and they aren't going to by a new one for
at least 3 to 5 more years... OLED is going to take it's sweet time getting
here, 3 to 5 years. Meanwhile 2k and 4k is going to arrive in the next year or
so because of pressure from distributers.

------
krschultz
I'm a full time Android developer. I have to wonder, what % of the slip is
Android overall and what % is Samsung specifically. I have to say I'm not
pleased with the quality of the latest Samsung devices. Motorola, LG, and HTC
all seem to be making higher quality phones.

~~~
MBCook
But at this point the other Android manufactures (at least that have a good
presence in the US) aren't making any money off Android phones, only Samsung
was.

If Samsung's profits are falling as an Android manufacturer where does that
leave users? It's not like Samsung was selling below cost. Without them the
others would have a higher market share but would they actually become
profitable?

Or is there just a glut of Android devices on the market to the point that no
one would have an easy time making a profit in the current environment? Is
this just a sign of a shake-up?

~~~
ancientworldnow
On your not making any money comment, HTC has been profitable the past two
quarters ([https://gigaom.com/2014/10/03/by-managing-costs-htc-sees-
ano...](https://gigaom.com/2014/10/03/by-managing-costs-htc-sees-another-
profitable-quarter/)) and LG has also been profitable in part due to their
mobile division
([http://www.lgnewsroom.com/newsroom/contents/64590](http://www.lgnewsroom.com/newsroom/contents/64590)).
Motorola seems to be heading towards profitability as well.

Perhaps Samsung's decline has been in part to the success of these other
handset manufacturers?

~~~
MBCook
That's good to know since Samsung used to be eating everyone's lunch and it
was becoming a two horse race.

As an outsider to this whole thing (Apple guy with little interest in buying
an Android phone at this time) it has always seemed like there was a pretty
big oversupply unless you only considered the flagship phones (and even then
it's still arguable).

The market share between the various Android manufacturers starting to even
out sounds good to me, but I wonder what it would do for prices and how that
would effect Android vs. iOS.

~~~
newscracker
The market share may even out in the low end segment, where many local
manufacturers in different countries build cheap (and possibly outdated, from
a first world perspective) hardware and slap whichever Android version they
can accommodate (it may not be the latest).

But overall, Samsung still holds a big chunk of Android market share and it
would take several years for that to come down to something we can consider as
stiff competition. Samsung has a lot of muscle and money to continue its
"hardware machine gun" spraying tens of devices to see what sells, which is
also aided well by a big marketing budget (probably the largest marketing
budget among all, including Apple and Microsoft in the mix).

The push to make Samsung more equal to other Android device makers could be
from different directions. One is Samsung's desire to go with Tizen and sunset
Android. This may not sit very well with the user base since the app market
for Tizen needs to be built, and that's one reason why Tizen may likely shine
in the nascent wearables segment than in the established smartphone, phablet
and tablet segments. The other push is really good devices from HTC and
Motorola that come with the latest version of Android and (especially for
Motorola, in my knowledge) the ability to easily get updates easily and
quickly. If HTC and Motorola survive for a few more years and continue
whatever good work they're doing, then they do stand a chance to improve the
overall market for the benefit of everyone.

------
Shofo
There have been parallels appearing now for some time, showing Samsung
alongside Nokia's doomed path. Samsung have neglected their software
development just as Nokia had (in terms of interface not being iterated and
updated). On top of that, hardware has not seen dramatic improvements. The
public and loyal journalists have been becoming increasingly disgruntled
(since the S4).

If they don't innovate dramatically with the S6 there is trouble on the
horizon for this behemoth. Samsung also need to position their experimental
products (the new edge and the old round) as their lead products and fully get
behind them. I always get the feeling they are hesitant like a person testing
the water by dipping their toe in, when they just need to take a dive. The
development is done and its in production so why not take a leap. If it fails
at least they will be known as a company with innovation at its forefront and
they can regress to their current practice.

------
srcmap
Cell phone seems to always be high revenue, high margin business but ONLY for
a few years for any one company.

Whoever won the top slot in cell phone biz can get tremendous revenues and
profit boost - Motorola, Blackberry, Nokia, HTC, now Samsung. Apple might last
a bit longer because of app/iOS infrastructure - but it will be tough to
compete with Android.

------
r00fus
Something to note in this article - this is Samsung Electronics - combined
mobile, TV and various other electronics manufacturer.

I wonder how bad the mobile division is doing if the entire electronics
company is forecasting a 60% profitability drop?

------
hzshen
Some high-tech industry sectors are actually labor intensive, such as the
mobile OS. I only see 3 mobile OS with real potential now: iOS, Google
Android, and MIUI (actually adapted from Android). Samsung is doomed because
they don't have the whole ecosystem. Their lead on only the hardware part is
not sustainable forever.

Sooner is better than later, see whether they can fix it...

~~~
souldoubt
Curious to see how Amazon's fork fares.

------
higherpurpose
Samsung has rested on its laurels for too long and has ignored important
criticism of its products. So I'm not even sad about it. They also own _too
much_ of the Android market, and there should be more equilibrium, or at least
have someone else dominate the market for a few years.

------
zarkov99
good. hard to find a more corrupt and unethical company.

