With profit margins slipping, ​Samsung cutting phone models and production costs by a third

With profit margins slipping, ​Samsung cutting phone models and production costs by a third
There are major changes brewing at Samsung, reports the Wall Street Journal, and chief among those is the fact that we will be seeing far fewer Galaxy Megas, Cores, Grands, Aces and so on. Even we already lost count of those, and we doubt anyone is trying to keep up anyway, as the tens of phones that Samsung is turning every year with very minor specs and design differences to each other and even their predecessors got very confusing very quickly.

Not anymore, though, as Robert Yi, head of investor relations, confirmed during a presentation in New York that it will be cutting its model portfolio almost by a third next year. Samsung's profit margins from the mobile business, which are its bread and butter, were cut in half this year, due to the increased competition from both other companies' flagships, and from the Chinese makers on the low- and mid-range side. That is why Samsung recently issued a memo to suppliers for cutting costs by 30%, and now intends to “increase the number of components shared across mid- to low-end models, so that we can further leverage economies of scale,” as per one executive. 

All in all, this bodes well for having far fewer Samsung handsets next year, and hopefully this will increase the margins sufficiently, so that Samsung focuses on making unique handsets on the high end, which it seemingly intends to do, starting with an eventual dual-edged Galaxy S6, or whatever the Project Zero undertaking gets named in the end.

source: WSJ

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30 Comments

2. android_hitman unregistered

hah, maybe we will Sammy pushing just 2 phones a year, NOTE and Galaxy.

6. AnTuTu

Posts: 1620; Member since: Oct 14, 2012

That will be great but then you are only limited in options. I think they need a decent low to mid range category. They shouldn't flood any category with various models and it will help them a lot.

12. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

Flooding the market with multiple options of the same model ain't always a good idea...

19. Finalflash

Posts: 4063; Member since: Jul 23, 2013

It is a learning experience, same as HTC suffered through before they wised up (albeit a little late). This will hopefully work to get us better models with more better choices rather than fewer good choices with an arsenal of crap behind them.

20. sgodsell

Posts: 7451; Member since: Mar 16, 2013

When Motorola launched last year the Moto G. They shook things up in the sense that a good smartphone didn't have to cost an ARM and a leg, but it also brought great specs for the price. Things have changed since then and more manufacturers have come out with inexpensive devices that offer the consumer great value. Look at the one plus one, and many others have come since then. They have great specs and at affordable prices that consumers love. Who wants a crappy phone with a poor 800x480 display when you can have a better display and quad core for little money. Things are better for consumers, but not for companies that have older devices that were still selling on the market. They have to either take their devices back or sell them off as a loss.

22. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

Motorola and 1+1 don't have varieties of the same model ...just Moto X, G and E and OnePlus One... However, Samsung has Multiple options of the same model (e.g. Grand, Grand duos. Grand quattro, Grand Prime and what not)...that's what i'm talking about.

8. laughmi

Posts: 283; Member since: Oct 28, 2014

Not helpful as Samsung will then name everything as Galaxy

13. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

Wot?? What name do you think they're using now??

14. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

Note is also a "Galaxy" ...Duh!!

31. giri.1131

Posts: 22; Member since: Feb 21, 2012

I think the galaxy brand should be for the note and S series alone whereas the mid range tiers should have a different design and definitely different brand name. Ditto applies to the low range as well

3. AlikMalix unregistered

Throwing everything at the wall and hope it sticks --- I guess this weekly new-releases business model did NOT stick... Here's hoping Samsung finds success with Tizen and I always said, "stick" with Note Series - scrap the rest. Samsungs one success story is bringing large screen phones to normal perception - even Apple had to break their favorite screen size (for my self I hope 4" is still available with new hardware in the future). But we cant have Samsung go, every circus needs a clown... I'm kidding... Good luck samsung, hope this new approach brings you back into black.. (I'm just full of one liners today, lol)

9. LetsBeHonest

Posts: 1548; Member since: Jun 04, 2013

"Throwing everything at the wall and hope it sticks" I hate this strategy of Samsung, flood market with different phones. In a way its good cuz everyone has smartphone which suits their need but it has a bad side too. Support. They don't support all these smartphone with updates. There is nearly hundred galaxy models. Many people simply left out with jelly bean, which is the same version the phone came out with(eg: Galaxy core). I live Motorola's strategy. They release limited amount of phones and update them to latest firmware.

4. E.N.

Posts: 2610; Member since: Jan 25, 2009

Cutting back on advertising and celebrity endorsements might help too, you never know

30. roscuthiii

Posts: 2383; Member since: Jul 18, 2010

Why would they do that? Advertising sells more phones (or any product for that matter) than anything else.

5. mobi_user

Posts: 152; Member since: Jun 18, 2013

I love this news.. Here comes the downfall. Hahaha. same song getting boring now.

7. aba71983

Posts: 807; Member since: Jul 24, 2014

I will stick to Apple iPhone and iPad. I'm still not sure about using other brands or OS.

10. laughmi

Posts: 283; Member since: Oct 28, 2014

You should go to a psychiatrist soon. The monster(sheep) within you is coming out!!!

23. aba71983

Posts: 807; Member since: Jul 24, 2014

Well, I can afford to buy iPhone and iPad. What about you? You better start cleaning your mother cloths so that she will give you extra allowance so that you can buy gadget like iPhone and iPad that I have, LoL... Lmao, iDroid.

24. Ashoaib

Posts: 3298; Member since: Nov 15, 2013

wow! thats nice dumby... so you start your rich vs poor sh*t again? but you always forget that regardless of how much money you have, you are poor in mind... where is your brain? izombies eat it?

28. corporateJP

Posts: 2458; Member since: Nov 28, 2009

You race camels to get rich, bro?

15. itsdeepak4u2000

Posts: 3718; Member since: Nov 03, 2012

Good thinking and good move Sammy, I'll say cut it by 50% or stop producing that crap in low-mid range segment. Less handsets with good varying designs will surely help 'em especially in low-mid range category. Again pricing will be a concern for competing with Chinese OEMs, so keep it low Sammy. Alpha and Note 4 designs looks somewhat different otherwise from Galaxy Star through S5 all looks the same.

16. Ashoaib

Posts: 3298; Member since: Nov 15, 2013

thats not bad... I hope samsung will make good phones in low & midrange catagory... till to date, samsung sucks in mid & low range, thats why chinese oems has taken so much momentum

17. Cicero

Posts: 1137; Member since: Jan 22, 2014

What about the A series? Will be a trend for Samsung? Or the price is to high for competing in low-mid market.

18. bubbadoes

Posts: 1225; Member since: May 03, 2012

wow. I'm a little sad about the news. was looking for mini, edge and prime versions of the s5

21. InspectorGadget80 unregistered

All Samsung need is two flagships the GALAXY S N NOTE SERIES. and one MINI SERIES. That's all they need.

25. DnB925Art

Posts: 1168; Member since: May 23, 2013

As a Samsung fan, I'm glad they're doing this. Although I stick only with the flagships (I'm on the Note series and my wife is on the S series), this is good for the low and mid range market. Even I don't know what models there are outside of the Note/S series. By reducing the models out there, they can better support/update the low and mod range phones, and by sharing components across models, they can reduce cost. One thing Samsung has which it has been doing lately a lot better is to be able to move quickly and shift, which they did with the Note and now will be doing with Project Zero/S6.

26. cripton805

Posts: 1485; Member since: Mar 18, 2012

In all honesty, they only need to produce 2 low/mid end phones, 2 mid/high range alphas, 2 high/ ultra end galaxies.

27. alexvv

Posts: 165; Member since: Oct 16, 2013

fan of samsung, i have never seen an oem more arrogant. relying only on their brand, samsung's midrange is completely messed up. yes galaxy s and notes are all perfectly fine but what's with the thousands cores, aces, youngs, grands etc. expensive, ugly as @ and sporting poor features.

29. corporateJP

Posts: 2458; Member since: Nov 28, 2009

Anything below the S (NOT Mini's) and Note lines is just garbage. They need to figure this out...

32. Palladium

Posts: 21; Member since: Nov 09, 2013

It doesn't matter whether Samsung has one or a million models; if they are still stick to the same game plan of awful specs at awful prices with awful software and support while relying only on their falling brand name and marketing to sell phones they are going to fail horrendously very soon. How did they came from making the best phones like S2/3 but then degenerate into this pathetic state baffles me to no end. They simply don't understand how their success came about.

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