Samsung is reportedly changing its strategy to focus on "profit margins" instead of "fancy features" for smartphones. Korea Times reports that Samsung has taken this decision due to the rise of Chinese handset brands as well as an uninspiring response from consumers for "fancy features" in its Galaxy series. The new move is said to be a way Samsung wants to streamline its Galaxy smartphone series and maintain the profits in the category.
A Samsung executive told the publication that the South Korean company is also planning to cut down on the budget Galaxy smartphones. The executive believed that the new strategy will not affect Samsung too much given the company's "strong market position."
The Samsung executive said, "We have been seeking growth in terms of shipments for years. Samsung is preparing for the post-smartphone era and that's why our handset unit has identified profitability as a priority over growth."
The executive continued that Samsung expects smartphone shipments to remain at 400 million units "based on the revised business strategy." The company is said to have notified investors of its new smartphone strategy.
"Samsung will keep the company-set share according to markets. We will launch promotional campaigns if we have to. But the company will be unlikely to initiate cash-intensive promotions to clear inventory and increase market share," Samsung executive said.
The executive added that the company expects the new strategy to boost profit margins for the handset division by up to 17 percent in second quarter of this year from the present 15.8 percent a quarter earlier.
To recall, Samsung earlier this year reported a better-than-expected profit for the first quarter that represented a 10 percent gain from a year earlier and this was believed to be driven by strong sales of its new flagship Galaxy S7.