Samsung’s Mobile Division Struggles, Has Apple Dethroned the Giant?
Samsung has long been the market leader for years when it comes to mobile devices. However, it seems that Apple has now taken the lead snatching the crown from Samsung.
If you’re not aware what happened, let me fill-you-in. Samsung’s market share has dropped 25% globally, that caused a massive financial hit to the company. According to the details revealed by Samsung regarding its performance during the fourth quarter of 2014, profits dropped 27%.
Figures suggest that the company managed to sell a total of 95 million phones, in which around 72 to 75 million were smartphones. That’s pretty close to Apple’s 74.8 million iPhones sales figure.
However, Samsung’s gross margin is nowhere near Apple’s 39%. The company’s operating margin dropped 400 points to 10% since last year. That’s not all, their EBITDA margin also dropped 3% compared to last year and is at 18%.
When it comes to operating profits, things don’t look encouraging there as well. Samsung’s mobile division could only manage $1.8 billion in operating profits, compared to last year’s $5 billion during Q4. That’s a 64% drop year over year.
On the other hand, Apple posted the biggest quarterly profit in the corporate history. The company revealed their net income to be $18 billion which is mainly due to the success of the iPhone 6 and iPhone 6 Plus.
It’s obvious that Samsung is under a lot of pressure to maintain reasonable profits and market share. The company is expected to reveal its latest Galaxy S6 smartphone in a couple of months. Clearly, a lot is riding on the success of S6.
One of the Samsung’s biggest market is China and it seems users in the region are starting to prefer Apple over the South Korean giant. According to a report by research firm Canalys, Apple who was at 7th place in the Chinese market for the last seven quarters jumped to 1st place with its success of iPhone 6 and 6 Plus.
Still, Samsung’s semiconductor division looked good and made $4.8 billion in operating profits while memory chips were in demand too.
The problematic area for Samsung for the time being is its mobile division, which has been hammered in the fourth quarter by Apple. The question is, can Galaxy S6 turn things around for Samsung?