Samsung is under increasing pressure after losing ground within the smartphone market not only to cheaper Chinese rivals, but also to Apple, a survey has found.
The South Korean company’s second quarter financial earnings guidance, issued last week, was significantly lower than analysts expected. Its operating income of 7.2 trillion (£4.1 billion) was down 25 per cent from the previous year, and the company is on track for its worst quarterly profit in two years.
Sales of Samsung’s flagship Galaxy S5 model have continued to lag behind the considerably older iPhone 5s, which went on sale in September last year. The Galaxy S5, which was launched in late March, sold around 5 million units globally throughout May, compared to 7 million iPhone 5s units, according to research firm Counterpoint. The research surveyed 35 markets, accounting for nearly 90 per cent of global sales.
The iPhones 5c and 5s accounted for 11.1 per cent and 11 per cent respectively of UK smartphone sales during May, compared to the Galaxy S5’s 9 per cent, research by Kantar Worldpanel ComTech found last month.
Counterpoint added the Galaxy S5 appeared to performing less well than the Galaxy S4 in its early launch against the iPhone 5, with each selling about 7 million units a month.
Galaxy S5 sales are expected to have remained stable at around 5 million units in June, said Tom Kang, Seoul-based analyst for Counterpoint. He said the Galaxy S5 fell short of market expectations in terms of display quality and by using a plastic case.
“They made one mistake, one product that didn’t hold up to expectations and they are paying the price,” he told Reuters. “They will have to move forward and leave behind what has failed and focus on the next product.”
Samsung declined to comment on Counterpoint’s data or disclose shipment figures for the Galaxy S5, though a Samsung executive in April said that the new flagship device was expected to outperform its S4 predecessor.
“We will strengthen our product competitiveness by reinforcing our premium brand reputation, powerful product line-up, and cutting-edge technology,” the company said in an email statement on Wednesday.
Data from research firm Canalys showed that Samsung’s market share in the first quarter of 2014 fell to 18 per cent from 20 per cent a year earlier, while the likes of China’s Xiaomi and Lenovo Group Ltd made gains.
Analysts said Samsung’s new products such as the S5 did not offer enough to entice consumers to pay a premium over cheaper alternatives that were rapidly improving in quality.
“Most major smartphone brands worldwide are battling brand fatigue at the moment,” said strategy analytics analyst Neil Mawston. “Consumers love their smartphones but almost all hardware, software and apps now look, feel or cost the same.”
Apple’s next iPhone model, believed to be called the iPhone 6, is expected to launch as soon as September and sport bigger screens, which would encroach on what has been a key Samsung feature.
The Counterpoint data also suggest that Apple’s smartphone sales have remained resilient even as anticipation for the new product launch builds. The Cupertino company is expected to report its fiscal third quarter results later this month.