It is expected that Samsung’s operating profit for the Q2 of 2015 will drop four percent from the previous year, falling to an estimated $6.12 billion in Q2 2015 from $6.26 billion in Q2 2014. The declining Samsung Galaxy S6 sales resulted in the seventh straight slip in profits for Samsung.
What are the reasons for declining Samsung Galaxy S6 sales?
Greg Roh, a Seoul-based analyst at HMC Investment Securities Co. said “S6 didn’t sell as well as the market had hoped for, partly because of continued outperforming of iPhones combined with the supply constraint. Sales sharply missed the market expectation, which implies that overall technology industry demand for smartphones, TVs and PCs is weakening.”
A new law was enforced last year in South Korea, which forbids smartphone vendors from giving hefty subsidies to phone buyers, which can also be one of the reasons for declining Samsung Galaxy S6 sales. However, this has proved to be a boon to Samsung’s rival Apple, whose iPhone sales in South Korea have grown. Latest iPhones from Apple also feature larger screens that are comparable in size to the Samsung phones, removing one of Samsung’s advantages.
A market research firm, Counterpoint Technology Market Research said “Last month Samsung sold nearly 6 million Galaxy S6 and S6 Edge smartphones by the end of April, which was much faster than its 2014 predecessor model. But the chances of Samsung’s flagship phones to overtake Apple’s iPhone 6 are small due to production constraints for the curved glass.”
Samsung has diverse interests from household appliances to heavy industry, but its mobile division has become its main business in the past few years. Declining Samsung Galaxy S6 sales resulted in the seventh straight slip in profits for Samsung, another reason for this can be due to tough competition from low cost Chinese vendors.