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Samsung forecasts 4.2 percent profit dip in Q2 as Galaxy S6 sales fail to meet expectations

By Shawn Knight
Jul 7, 2015
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  1. Samsung on Tuesday said it expects an operating profit of around 6.9 trillion won ($6.1 billion) for the three-month period ending in June, falling short of the 7.2 trillion won analysts were expecting. The figure represents a 4.2 percent drop compared to the year-ago quarter.

    It’s the seventh straight quarterly profit drop for Samsung as the South Korean handset and memory chip maker struggles to fend off rival Apple in the high-end smartphone market and Chinese companies such as Xiaomi in the low and mid-range market.

    Early indications suggested the Galaxy S6 would indeed act as the catalyst for change that Samsung had been hoping for. Both the Galaxy S6 and the S6 Edge were well-received by reviewers, some going so far as to proclaim them as Samsung’s best yet.

    Samsung initially expected to sell four Galaxy S6 smartphones for each S6 Edge it sold. As it turns out, demand for the curved S6 Edge was much higher than anticipated which led to shortages.

    Unfortunately, Samsung wasn’t able to ramp up production in time to meet demand. Boosting production takes time and in the competitive smartphone market, there’s a very small window of time in which to sell a new product before the next big release from the competition renders it obsolete.

    To make matters worse, Samsung is also having to deal with excess Galaxy S6 inventory. In the end, the company may have to resort to price cuts to boost S6 sales which will ultimately have an impact on profit.

    Permalink to story.

     
  2. MoeJoe

    MoeJoe TS Maniac Posts: 398   +207

    Interest in an obvious over-rated device that relies solely on gimmickry
    will obviously lead to diminishing sales in the throws of a quiet recession.
     
    p51d007 likes this.
  3. Tanstar

    Tanstar TS Guru Posts: 407   +88

    You are referring to the S6 Edge? Because the S6 itself is an outstanding phone, though I went for the LG G4 for the removable battery and expandable memory.

    What is throwing me is that Samsung is the highest volume smartphone maker on the market and they are still failing to meet expectations? Who set the expectations so ridiculously high?
     
  4. VitalyT

    VitalyT Russ-Puss Posts: 3,149   +1,423

    Phone market is relatively stale when it comes to phones design. And while we have to rely on it every day, people get really bored with always the same phone essentially, in terms of shape. This explains the interest to the S6 Edge versus regular S6, it looks different, which seems enough for an upgrade.

    Regular S6 is just another phone, nothing else.
     
  5. TheBigFatClown

    TheBigFatClown TS Guru Posts: 647   +227

    I don't think the product relies on gimmickry necessarily. I think it just becomes harder and harder to make something better and better as often as cellphone makers try and do. Technology can only advance so fast. And so what do you do if technology is not advancing at the rate it once did in the past?

    Consumers from past market sales figures? That's who set the expectations so high. I think what we are seeing here is the law of diminishing returns. The benefits of buying the latest version of a phone every year are probably becoming less and less. Of course, I am just guessing. I am still using my S3 which was handed down to me by a family member and I am still happy with it "enough" not to require purchasing anything newer.

    The USB 2.0 port on the S3 is painful but it works so...
     
  6. Tanstar

    Tanstar TS Guru Posts: 407   +88

    That's the phone I just replaced and it was a good one!
     
  7. MoeJoe

    MoeJoe TS Maniac Posts: 398   +207

    I was referring to both S6 models; edge functionality, metal chassis, wide-angle selfie lens. Gimmicks. And in the process, they ditched flexibility, which was a corner stone to their iPwn differentiation, besides Android OS of-course.

    There is boredom, market saturation, the diminishing returns things and prudent buying trends in the climate of a quiet recession. All these things. Phones are bling to many, so changing it up every year to two years is no different than changing out shoes. If that trend is weakening, it is clear indication and has a lot to do with consumer confidence. But back on the diminishing returns thing, it is truly similar to what has gone on with HDD tech. Once the remaining players were able to garner 1 TB of space on a single disc, the ball game changed. Who in their right mind needs, 3 TB, 4 TB, soon-to-be 5+TB out of single drive ... in the consumer space. Diminishing returns.

    Phones become an appliance like everything else after a while ...
     
  8. MoeJoe

    MoeJoe TS Maniac Posts: 398   +207

    Pretty much. Prob is, it's not what many have come to expect from Samsung.
     
  9. VitalyT

    VitalyT Russ-Puss Posts: 3,149   +1,423

    Creativity by definition doesn't follow expectations.
     
  10. MoeJoe

    MoeJoe TS Maniac Posts: 398   +207

    LOL. Creativity doesn't much matter if you create yourself out of a market trying to mimic Apple and taking away flexibility ... the latter being the unexpected part.
     
    mosu likes this.
  11. VitalyT

    VitalyT Russ-Puss Posts: 3,149   +1,423

    How the hell S6 Edge is mimicking Apple or a creativity outside market? Neither of the two are true.
     
  12. Touched a nerve did we? LOL
    No expandable storage, no removable battery, metal chassis, flashy commercials and gimmicky BS.
    All that stuff appeals to the cults, the fanboi-isms of the Apple crowd ... and obviously ... YOU too !

    I could hear you fists pounding on the desk all the way over here,
    when you screamed ... "Neither of the two are true."
     
    mosu likes this.
  13. MoeJoe

    MoeJoe TS Maniac Posts: 398   +207

    couldn't have said better myself!
     
    Last edited: Jul 14, 2015
  14. Nothing new here. This was expected, only those fanbois of samsung cult would not agree to this fact. One of our malls here have both samsung and apple store. One is smaller in floor space than the other one. One is packed and one can bring their air drones and can play inside freely without hitting someone. Guess which store is that? Truth hurts but I see some members here in the forum does not really want to open their eyes and most of the time, if its an Apple article that is posted here, they are the first bashers. If there is an android article exposing security concerns, they are the first one to say that the article is flawed.
     
  15. stewi0001

    stewi0001 TS Evangelist Posts: 1,181   +528

    First off, I'm surprised that there was even a demand for the edge. I guess we live in an age where gimmicks and fads rule. Second, if they still had removable battery and memory card, I would bet that sales would have been much higher. Finally, limiting the S6 Active to AT&T only is such a terrible idea.
     
  16. My S5 will be my last Samsung phone. Upgraded from an S3 and the only feature I enjoy on the phone is the IR port. Got sold on getting Lollipop update that was due 3 months after receiving the phone and its almost a year later since its release still nothing even available through Kies. Support just keeps saying we cannot confirm blah blah blah. Phone this expensive and I have to manually get and use ROMs released for other Countries to get an update guarenteed on my phone's packaging. Samsung South Africa go shove your S6 up your ....
     
  17. DaveBG

    DaveBG TS Addict Posts: 226   +72

    Only 4.2% dip in sales? For a phone lacking SD card and removable battery this is actually a success!
     
  18. Holy crap. Their profit is ONLY 6.1 billion?

    This company is definitely nearing bankruptcy now.
     
  19. Nobina

    Nobina TS Evangelist Posts: 843   +333

    I told my friend S6 Edge is a gimmick and he tried to convince me how having that edge is a good thing or something. So I guess people actually care about it.
     

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