Facing the saturation of the smartphone industry, Samsung has radically changed its game plan. The smartphone market has been both a blessing & a curse for Samsung. After reaching new heights in 2013, a shocking drop in mobile profits forced the mobile giant to rethink its business model. This led to a series of changes that have helped Samsung maintain their position as one of the top companies in the world. From focusing on higher end products to searching for the next big breakthrough, Samsung has completely reinvented themselves in the last 3 years. While this tenacious approach has stirred up controversy among its board members, it has saved the company from becoming obsolete in an ever-changing market.
Samsung Reinvents Itself to Stay Afloat
“We’ve now gotten to a point where we can secure a baseline profit even if the market stagnates, so long as we don’t make a bad mistake,” said Kim Gae-youn, vice president in charge of Samsung’s smartphone product planning. “I’m confident we can hold our ground.”
After a strong wake up call in 2014, Samsung has returned to the top with a change in vision. After enjoying a banner year in 2013, Samsung was hit hard by the flop of the Galaxy S. This forced them to readjust their business model, with the new focus being quality over quantity. They revamped their smartphone designs with metal frames, curved screens & techie treats such as OLED screens. They also created spectacular camera specs that helped them regain their foothold in the smartphone market. Samsung has even made headlines with their recent forays into virtual reality & even smart surfboards.
Since offering an outrageously large product portfolio was no longer cost effective, Samsung went back to the drawing board. Instead of offering a massive amount of phones they decided to focus on a few high end smartphone models. This led to them shedding about one third of their products, which gave them the extra capital they needed to revamp their more popular models. This bold move paid off and allowed Samsung to recover in big markets around the globe. In India customers were often confused by the different smartphone variations, but now that they have slimmed down their offerings they are easier to identify.
Another tough call was the camera specs for their flagship Galaxy S7 smartphone. Samsung defied industry protocol when they traded in fewer pixels in exchange for improved features such as auto-focus & low light performance. Since over 2 thirds of consumers base their smartphone purchases on camera features this was a risky move. However, in the end this payed off. Samsung experienced its best profit in almost two years in Q1, with much of the sales being fueled by the Galaxy S7.
The wild success of the Galaxy S7 is prompting Samsung to focus on high end smartphones. Offering a cheap alternative is no longer on Samsung’s agenda. They are now focusing on premium phones that cost $600 & above. This allows Samsung to use its muscle to compete in an industry where only a few companies are powerful enough to play.
Even though 2016 has been an impressive year for Samsung, they will have to fight hard to maintain this growth. Despite their impressive first quarter sales Samsung’s gartner has predicted that global smartphone sales growth will slow to a sluggish 7% by 2017. To combat this Samsung will have to keep giving the public high quality smartphones that offer something unique. If elegance & innovation are going to be Samsung’s new calling card they are going to have to prove it with the Note 6.