Samsung Still Finding Trouble With Their Mobile Device Division

You would think that Samsung was riding high with a plethora of smart phones and tablets covering every form factor known to human kind, but Fitch Ratings just issued an opinion that their market share would come under fire along with that of Apple.

Fitch Ratings is a major credit rating agency in the US, so their opinions are taken a mite bit more seriously than those of the standard Wall Street broker. Nitin Soni, Corporate rating director at Fitch, made a prediction that the worldwide market share for Samsung would fall next year from 31 percent to 25 percent. Soni also suggested that Apple could be expected to experience a market share decline from 15 percent to 14 percent.

The thinking behind this difference between the brands is that Apple tends to cater to the luxury market for smartphones and tablets. Despite the supposedly lower cost iPhone 5C, the reality in emerging markets is that this model is still several times the cost of a dual-core low- to mid-range alternative model from Samsung, HTC and other Android brands. Only those who can really afford Apple tech in the emerging markets buy it and in some countries there are even design copies of iPhones and iPads for cut-down prices.

Local Brands Gaining Ground

In China, according to research company Canalys, the Xiaomi brand of smartphones has overtaken Samsung as the best selling brand. Elsewhere in Asia, brands like Huawei with their Chinese “phablet” Ascend range of Android smart phones have also been doing well throughout Asia markets.

Price competition is more fierce in emerging markets where customers are less affluent and looking to get as much bang for their money. This is putting increasing pressure on established brands such as Samsung who have products up and down the price range with different form factor sizes and features.

Samsung Profits Under More Pressure

Just as Samsung continues to release new models to fill every available niche, they are having to increase their advertising spend to get their phones in front of consumers. Getting that mind share is proving expensive and as competition heats up, this is expected to continue to erode profitability going forward. Last July saw a 25 percent decline in profits which was the 3rd such decline in profit levels for the company. As ad spending beefs up, the news doesn't look good for the sustained profitability of their smart phone and tablet divisions.

Making Gains In the USA

The Samsung Galaxy S5 has done particularly well in the United States and the upcoming Galaxy Note 4 is already creating a high level of interest. The big push into health and fitness, particularly through the wealth of new sensors included in the S5 smart phone plus the Samsung Wear product line, are making health a new battleground among mobile manufacturers.