Samsung profits down for first time in three years, smartphone market share falling

Samsung Electronics has released financial results for the second quarter of 2014 that show the organisation's first drop in net profit in three year. The Korean giant announced a net profit of USD$6.1 billion, down from $7.58 billion the previous year.

By Alex Choros

Samsung Electronics has released financial results for the second quarter of 2014 that show the organisation's first drop in net profit in three year. The Korean giant announced a net profit of USD$6.1 billion, down from $7.58 billion the previous year.

Despite the launch of Samsung's latest flagship, the Galaxy S5, the company's smartphone and tablet sales both decreased. Samsung is attributing the decrease to "traditionally low" demand in the second quarter. On the company's official blog, Samsung note plans to release "new premium mobile devices, and a new flagship model in the large screen category". It is speculated that the products referred to are the Galaxy Alpha and Galaxy Note 4. The electronics giant may not be completely confident in the success of these devices, noting that "prospects for improving profit margins are still uncertain, due to the increasing market competition."

The increased competition in question isn't coming from Apple; it's coming from Huawei. Samsung's smartphone's market share fell from 32.3% in 2Q13 to 25.2% in 2Q14. For comparison, Apple's fell from 13% to 11.9% in the same period. While these two smartphone titans have lost market share, Huawei is gaining ground. Huawei doubled its smartphone shipments from 10.4 million to 20.3 million, and came to close to doubling their market share.

Samsung appears to have already reacted to this increased pressure; hundreds of Samsung senior managers have taken a 25% cut to their bonuses, according to the Wall Street Journal.

Sources: Samsung, The Verge, Wall Street Journal

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