Triple Distress of Samsung Electronics
A crisis is looming large for Samsung Electronics’ mobile phone business in Asia. This is because Apple is launching an aggressive marketing drive in China and Japan to keep Samsung in check, while a bill to restrict mobile phone subsidies is about to pass the National Assembly in Korea. The cumulative sales of Samsung Electronics’ mobile phone business unit amounted to 104 trillion won (US$98.8 billion) during the first three quarters of this year.
According to market research firm Strategy Analytics, Samsung Electronics has dominated the Chinese smartphone market during the same period with a market share 21.6%, whereas Apple’s share stood at just 4.8% to fall behind Chinese makers like Huawei, ZTE, and Coolpad. In short, Apple is no match for Samsung as far as the Chinese smartphone market is concerned.
However, things are likely to change down the road, as commercial LTE services are launched there within this month. China Mobile, the world’s largest mobile carrier with 750 million subscribers, is planning to release the iPhone 5S and iPhone 5C with its LTE services too. Forbes has estimated that Apple’s monthly sales volume would increase by at least 1.5 million units, thanks to commercial LTE services.
The gap between Apple and Samsung is further widening in the Japanese market as well, where the former has outperformed the latter for long. According to the research firm, Samsung’s quarterly sales volume has continued to fall for three consecutive quarters, from 1.9 million in Q4 last year to one million in Q3 this year. Meanwhile, Apple’s market share has risen up to 38.1%, overtaking those of Sony and Sharp.
Samsung’s hard time in Japan can be attributed to various reasons. For example, NTT DoCoMo, the largest mobile carrier in Japan, has selected the iPhone 5S as its flagship model for the latter half of this year and concentrated subsidies on it for Apple’s sales volume to skyrocket. In the first half, Samsung’s Galaxy S4 benefited from the same policy.
In addition, Japanese consumers are shunning Korean products, to worsen the situation. “Most Japanese customers prefer American products like the iPhones and domestically-manufactured smartphones to all of the rest,” said an industry expert, adding, “They think as little of Samsung’s products as many Koreans think little of those made by Chinese manufacturers.”
In the meantime, Samsung is in the face of an additional risk in its home turf, where its market share is over 60%, due to a pending bill. The government, the other mobile carriers and a lot of civic organizations are in favor of the Act on Improvement of Mobile Communication Terminal Distribution Structure, to isolate Samsung. According to the bill, handset makers are also subject to regulations in the event of excessive subsidies, and the subsidies they provide are subject to compulsory submissions, which could lead to a direct hit against its sales activities.