Samsung Electronics Co. plans to cut the number of smartphone models offered next year in order to cut costs and counter falling profits.
The South Korean technology giant said it would cut the number of models by about 25% to 30%, Robert Yi, head of investor relations, said during a presentation in New York. His remarks were confirmed by a company spokesman Tuesday.
The company did not tell exactly how many smartphone models would be affected by the minimization.
The decision to streamline its massive array of smartphone portfolio came as an effort to compete with cheaper models, particularly Chinese smartphone makers like Xiaomi Inc.
Samsung's third quarter net profit went down dramatically by 49 percent.
Samsung will "increase the number of components shared across mid- to low-end models, so that we can further leverage economies of scale," an executive at the company's mobile division said during an earnings call last month.
While the demand for Samsung's Galaxy phones are dwindling down, having fewer models would let the tech company to better oversee its supply and inventory chains, according to analysts.
Robert Chira, an analayst at Wall Street firm Evercore ISI said that it was "about time" for Samsung to trim down its number of smartphone models available in the market in order to put its attention towards lowering costs.
"It is likely to help Samsung reduce costs, which is imperative to stabilizing their margins," Mr. Cihra said.
After maintaining smartphone operating-profit margins above 15% for 10 consecutive quarters, Samsung's margins from its mobile and information technology business went down to 7 percent in the third quarter ended September--the lowest level since the end of 2008, before it launched its first Galaxy smartphone.
Acknowledging the slide in margins, Samsung executives said during an earnings call last month that its new goal is to maintain a sustainable double-digit percentage margin starting 2015.
