Blog Post

Samsung will make fewer phone models next year

Samsung makes a lot of different phones, almost all of them functionally identical Android devices with slight differences. Now, according to remarks made by Samsung head of investor relations Robert Yi reported by the Wall Street Journal, it’s planning to cut its list of current devices by at least a quarter.

Samsung’s shotgun approach to phone development has worked in the past as the Korean giant became the world’s number one mobile phone maker. But it also introduces inventory risk and consumer confusion: After all, what are the salient differences between the Galaxy S5 and the Galaxy S5 Active and the Galaxy Note 4 and the Galaxy Alpha — all high-end devices currently sold in the United States market?

Go overseas or into a less expensive bracket and Samsung’s roster becomes even more muddled, with devices like the Galaxy Mega line and the Galaxy W. For its home market of Korea, Samsung makes flip phones for the elderly as well as supercharged versions of its flagships specifically to take advantage of minor improvements in telecom technology. And what happens when [company]Samsung[/company] has extra crates of a phone that didn’t end up selling particularly well?

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Samsung’s bottom line has been taking a beating recently — although its mobile division is still profitable, in the most recent earnings report, profits fell 74 percent from the year-ago quarter. And Chinese companies like Xiaomi (which is now worth $40-$50 billion) are garnering a ton of low-end device sales in Asia. So it’s time for Samsung to change.

Samsung’s earnings have been disappointing because the company has been racing to the bottom, competing with other companies to produce Android phones that are ultimately commodities and killing margins. Will a smaller number of planned devices change that? Maybe, but Samsung must make sure that it’s cutting generic Android devices that can be made by multiple factories in Shenzhen, China, and not innovative products that other companies can’t produce yet — like the Galaxy Note Edge with its audacious curved screen, or the Galaxy Gear, a smartwatch that can make calls.

2 Responses to “Samsung will make fewer phone models next year”

  1. Xiaomi doesn’t even do low end. Their cheapest phone is midrnage and it’s the first time they went that low..They got 4 phones and 1 tablet. Redmi 1s 4.7 inch 720p, quad A7, 1GB RAM , a good 8MP cam at about 98$ now. Redmi Note with 5.5 inch 720p, 8xA7, 2GB RAM 13MP cam at 147$ , MI3 with 5 inch 1080p, Snapdragon 800 as last year’s flagship at some 245$, MI4 as the new flagship at 327$ (or starting at 294$ if you include the version with just 2GB RAM they had on singles day) and the tablet is 7.9 inch high res with Tegra k1 so as high high end as it can be. Nothing low end, 3 out of 5 devices are high end,the other 2 mid -range and should see an upgrade soon. A few other China brands don’t do low end either and it’s hugely unfair to claim otherwise.
    As for Samsung racing to the bottom, maybe on specs but not on pricing. They’ve been hurt by declining sales, lower mix and only mild price cuts.
    The inventory thing is not about leftovers, is more about logistics and leverage over suppliers plus dev costs ofc.
    What they actually need is a 50% price cut and they’ll have to do it sooner or later.