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Facing margin pressure, Samsung makes cheaper versions of its nicest phones

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On Thursday, Samsung reported quarterly earnings that indicated its mobile division is headed in the wrong direction, thanks to dropping profit margins. Its two new mid-priced smartphones, announced on Friday, aren’t going to help.

The Galaxy A5 and A3 use the aluminum construction style that we’ve seen and liked on the Galaxy Alpha and the Galaxy Note 4. But those devices are expensive and probably don’t sell particularly well in emerging markets or China. Although [company]Samsung[/company] didn’t announce a price for either new A-series handset, you can expect them to cost a fraction of what Samsung’s flagships cost.

The 5-inch model is the Galaxy A5. Its supports LTE, but the rest of its specs are middling: A 1.2 GHz quad-core processor (likely the Qualcomm Snapdragon 400), 2GB of RAM, and a 720p AMOLED screen. The Galaxy A3 has the same hardware behind a 4.5-inch screen with a 960 x 540 resolution.

Both phones have a 13-megapixel camera on the back. Samsung’s claiming that these handsets are its “slimmest to date,” at 6.7mm thick for the Galaxy A3 and 6.9mm thick for the Galaxy A5. Both come with 16GB of built-in storage and Micro SD card slots for expandable storage.

But Samsung isn’t going to focus on the specs: Like many mid-range phones, these two are being positioned for “young consumers,” with “advanced functions to support social networking.” That apparently means that Samsung has upgraded its front-facing cameras to 5-megapixel modules and is highlighting a bunch of selfie modes in its camera software. Both handsets will come in a variety of teen-friendly colors.

Price will be key to these devices: They’re going to be competing with phones from companies like Oppo, Xiaomi, and even Motorola with its Moto G and Moto E. It’s possible that these phones won’t even be sold in the United States.

Samsung’s challenge isn’t to sell more mid-range handsets, it’s figuring out how to get consumers to pick its high-end smartphones. Otherwise, its mobile division problems — like selling more phones but making less money — will continue.


2 Responses to “Facing margin pressure, Samsung makes cheaper versions of its nicest phones”

  1. Actually no they are not cheap or even cheaper, the point is too fool consumers into buying shiny things (like Apple has always done) and the pricing will be ridiculously high for the hardware. In many if not most markets the A5 will cost as much as the S5 and more than the S4.
    Samsung is desperate to keep profit levels ( the curse of listed companies) so they are trying to up margins and they haven’t accepted yet that they got to compete. Remains to be seen how much share they accept losing before they do what they have to.
    This A5 will be priced at 500$ or so but it is a 150-200$ device at China pricing and that’s rather generous given that in China, 1080p seems to be starting to replace 720p in sub 150$ phones and if a major player does it soon,everybody will follow. Huawei has the Honor 4 Play , ZTE has the v5s with less RAM and NAND and plastic body but similar in the remaining specs at 131 and 147$ and that’s just the start in China for A53 based phones, Xiaomi is yet to update it’s Redmi line, the Mediatek A53 SoCs are yet to hit retail so a new tide of devices will arrive soon and 720p 5 inch or less+quad A53 is likely to fall bellow 100$ while 5 inch 1080p+quad A53 rules the 100-150$ segment.