Samsung profits hit severely by Apple iPhone 6

Tech aficionados must know how the Samsung Galaxy devices invaded and conquered the global smartphone market that once belonged to Apple’s iPhone. It’s now Apple’s turn to do the same thing to Samsung. Recent reports suggest that the weeks following the launch of the iPhone 6 have witnessed Samsung’s Galaxy phones turn into basket cases from feature-filled smartphones; experts believe that things could be even worse for the Korean company.

On Tuesday, Samsung announced that the third quarter of 2014 saw its profit falling by 58-62% from what it was during the same phase in 2013. What’s even worse is that this fall is bigger than what analysts expected the company to suffer. The signs are not good for Samsung as the company has now seen decrease in its operating profit in four consecutive quarters.

Right now it’s not possible to have a complete breakdown of Samsung’s performance as the company has not yet released full results; however, it can be confidently said that the consistent decline in the multinational conglomerate company’s profit is caused by problems in its mobile phone division.

Samsung in a recent statement has said that during this (the past few quarters) phase its smartphone shipments have increased “marginally”; however, still there’s no reason to declare the company’s mobile division “not guilty”. This is because while the selling prices of the devices have gone down, their marketing expenses have become much higher.

The low-end Samsung smartphones models are facing stiff competition from devices marketed by Chinese handset manufacturers. The high-end units introduced by Samsung, on the other hand, are receiving severe competitive pressure from Apple’s iPhone, particularly the two new models unveiled at the September 9 event (the iPhone 6 and the iPhone 6 Plus).

By launching the iPhone 6 and the iPhone 6 Plus, Apple successfully wiped out the most distinguishing feature of Samsung smartphones, a big display. The bigger model of the two i.e. the iPhone 6 Plus has helped Apple to step into a segment it was not a part of, the phablet segment.

The newly launched iPhone models were available for purchase only for 12 days in the 3rd quarter, and that was enough for them to cause such a big decline for Samsung. So, experts are expecting the impact of these Apple products to be much bigger on Samsung in the 4th quarter of 2014.

According to C.W. Chung of Japanese financial holding firm Nomura, the fact that Samsung earned big revenues by selling mobile devices in the past few years is nothing more than an anomaly. Chung explained that this happened primarily due to the excessive high price of Apple handsets.

If one is ready to look beyond the mobile phone business, he or she will surely find some bright spots for the Korean company. Samsung can still earn big revenues through its components business, which include displays, logic chips, and memory. It’s true that these components will never be as appealing as smartphones, but they will still help the company make money consistently.

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