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October 30, 2014

Samsung rethinking smartphone strategy after sales slump

Poor quarter could mean worst year for the phone maker since 2011.

By Ben Sullivan

Samsung’s mobile phone sales have slowed, forcing the South Korean firm to restructure its mobile strategies.

Samsung’s third quarter announcement, which shows its performance from July to September this year, reveals that the company’s profits have dropped to nearly their lowest in three years.

Net profit for Q3 was down 49% to £2.5bn, with the Samsung’s mobile arm reporting an operating profit of £1bn, down from £3.9m for the same period last year.

Apple’s iPhone 6 and Chinese competitor smartphones priced lower than Samsung’s offerings have cut into the Galaxy S5 maker’s sales.

Despite Samsung selling more phones than Apple, the lower price point heavily affected profits.

Samsung said: "The average selling price of smartphones declined due to an increased share of middle- to low-end smartphone sales and price reductions of existing smartphone models."

For the same period last year, Samsung’s grasp on the global smartphone market was 33,3%, but it has now decreased to 25.2%.
Chinese firms such as Xiaomi, Huawei, and Lenovo, have seen their market share increase.

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SVP of Samsung’s mobile arm Kim Hyun-Joon said: "Our mobile unit is going through a temporary difficulty, but we are trying to maintain a steady growth by … fundamentally changing our business structure."

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