Samsung is rethinking its mobile strategy, reportedly planning to reduce its smartphone range by a third and focus on price competitiveness instead.
The company has never been too shy about flooding the market with all sorts of handsets designed to suit as many tastes and budgets as possible, but that may not have been the best strategy. Samsung saw declining profits from weaker-than-expected smartphone sales, and its performance from the latest financial quarter has apparently prompted the company to review its mobile strategy.
While Samsung is a real force on the smartphone market, the company is facing increasing competition from new firms such as Xiaomi, which are entering emerging markets with attractive and cheap smartphones.
"Samsung Electronics Co. said it would reduce the number of smartphone models it offers next year, part of a move to cut costs to combat declining profit," the Wall Street Journal (WSJ) reports.
"The South Korean technology major said it would cut the number of models by about 25% to 30%, Robert Yi, head of investors relations, said during a presentation in New York. His remarks were confirmed by a company spokesman Tuesday."
"The decision to streamline its large smartphone portfolio came as the company seeks to cut costs to better compete with cheaper models, mainly from Chinese smartphone makers such as Xiaomi Inc.," adds the WSJ.
This means that next year Samsung will dramatically reduce the number of smartphones it brings to market. It remains unclear, however, whether this entails launching fewer new models in 2015, or simply ditch poorly-selling devices. Either way, having fewer devices on the market will allow Samsung to more efficiently operate its inventory and supply chains.
For several years, the South Korean company has been flooding the smartphone market with a huge range of handset models, in many cases spinoffs of flagship devices. Samsung is still the world's top smartphone brand despite its declining profits, and this new strategy should help the company better compete against new rivals.
It remains to be seen whether Samsung's mobile strategy for 2015 will result in more substantial profits, but it sounds quite promising. Having fewer handsets at more competitive price points could make a big difference compared to having a slew of handsets on the market and facing poor sales for many of them.
