Samsung has grown by leaps and bounds over the past few years, but it turns out that its reach may be slowing up a bit. The company has reported its first decline in quarterly profit in two years for the December quarter, according to TechCrunch. The recent announcement underscores the competitive market of smartphones.
In 2013, Samsung was at its height. One in every three smartphones sold carried the Samsung brand, according to Businessweek. In addition, employees celebrated bonuses totaling more than $730 million. Yet it seems as if this particular tide of profit is turning.
The Apple iPhone is at the higher end of the market, and aggressive rivals such as Lenovo and Micromax are selling much cheaper versions of Android phones, according to TechCrunch. This leaves Samsung somewhere in the middle, which means that it may just be their toughest year yet.
"Earnings will remain stagnant this year as the explosive growth of the past two to three years seems to have ended," said Lee Sun Tae, a Seoul-based analyst at NH Investment & Securities Co., in an interview with The Dallas Morning News. "Although the lower-end smartphone market will continue to grow, the scale of profit from that segment doesn't compare to the high-end market so the growth seems limited."
That said, Samsung is still moving forward. It plans to release the Galaxy S5 by April. In addition, it plans to pair the smartphone with the Gear smartwatch. The company hopes that the new features will help spark sales after the latest fall.
"Samsung's two major challenges for 2014 are to maintain its mobile-phone leadership in China and the U.S., while simultaneously growing its tablet business quickly to knock Apple iPad from its perch," said Neil Mawston, an executive director at researcher Strategy Analytics, in an interview with The Dallas Morning News. Whether or not Samsung succeeds, though, remains to be seen.
