CNET was among the first to report tonight that Samsung posted its second straight quarter of shrinking profits due primarily to weakening demand of its high-end smartphones. The South Korean manufacturer reported a first-quarter operating profit of $8.2 billion, down 3.3 percent from the same period a year ago. Its mobile business — which, as CNET notes, usually generates roughly two-thirds of Samsung’s revenues — saw its operating profit fall 17 percent from the fourth quarter of 2014.
Samsung said it expects its mobile business to improve in the second quarter thanks in large part to the Galaxy S5, which launched a few weeks ago to generally positive reviews. And the company is planning to sharpen its focus on emerging markets with new low-end smartphones in a move that should help it address its waning share of the worldwide smartphone market.
But Samsung is clearly facing increasing competition at every range of the handset market, and those low-end devices certainly aren’t going to produce the big margins Samsung has long enjoyed with its line of Galaxy phones and tablets. The manufacturer had been moving aggressively to build out its own line of mobile software and services within the larger world of Android, but Google’s tactics to retake control of its mobile OS is sure to slow those plans in a big way. Samsung continues to quietly develop Tizen, the mobile OS that has roots in the MeeGo platform that Nokia abandoned when it switched to Windows Phone. Smartphone margins continue to get thinner, so Samsung needs Tizen to thrive if it is to expand into the promising world of mobile services.