Samsung's decline

[StrangerGuy]

who said anything about most selling phone.I'm talking about its profit gains for the 1/4 and I'll bet you they won't hit anywhere near what they were with the 6s next year as they did now from giving people a bigger phone.

you really think a 6s is going to sell as much as the 6 did to hit there 13 billion mark again?

Ps I predict apple will lose 15-20% profit from year to year q4 / q1 withe the 6s as most people got what they wanted and apple's big screen market gets saturated just like Samsung hit a wall after the gs3.

There's one thing that Apple naysayers don't get it: iPhones are status symbols regardless of screen size/specs. It's a sustainable gold mine by itself unlike Samsung who lucked out once just because of large screens and now everybody else also doing the same large screen trick.

BTW, I never had an iPhone.

 

[ControlD]

who said anything about most selling phone.I'm talking about its profit gains for the 1/4 and I'll bet you they won't hit anywhere near what they were with the 6s next year as they did now from giving people a bigger phone.

you really think a 6s is going to sell as much as the 6 did to hit there 13 billion mark again?

Ps I predict apple will lose 15-20% profit from year to year q4 / q1 withe the 6s as most people got what they wanted and apple's big screen market gets saturated just like Samsung hit a wall after the gs3.

I think it will be interesting to see what happens with the 6s. Here in the US Apple is somewhat insulated by contract pricing. People that are due for an upgrade when the 6s is released will most likely make that upgrade. Will people that don't get contract pricing be willing to ditch their year old iPhone 6 for a 6s? I'm not sure. I will never bet against Apple when their fans are legion but at some point good enough has to be good enough when $700+ yearly upgrades are on the line.

I think Apple has a LOT on the line with the Apple Watch. If that product takes off it will do wonders for Apple's bottom line. If it fails things could be pretty rough, at least for a quarter or two.

 

[gorcorps]

Eh, it's just competition. Samsung had too large of a market share given the other Android manufacturers anyway, so things are beginning to balance out. As long as they continue to offer SD card support, removable batteries, and IR blasters they'll continue to have my business. Everybody has different needs so they go with the phone that suits them best.

 

[Commodus]

I think it will be interesting to see what happens with the 6s. Here in the US Apple is somewhat insulated by contract pricing. People that are due for an upgrade when the 6s is released will most likely make that upgrade. Will people that don't get contract pricing be willing to ditch their year old iPhone 6 for a 6s? I'm not sure. I will never bet against Apple when their fans are legion but at some point good enough has to be good enough when $700+ yearly upgrades are on the line.

I think Apple has a LOT on the line with the Apple Watch. If that product takes off it will do wonders for Apple's bottom line. If it fails things could be pretty rough, at least for a quarter or two.

I figure the iPhone 6s will do pretty well, if just because there are so many circumstances working in its favor: it's going to catch most of the 5s upgraders, the people who wanted a 6 but couldn't due to carrier limits, the burgeoning Chinese market and the folks leaving Samsung who see Apple as their best alternative.

As for the Apple Watch, I'm not so sure Apple has bet the farm on it. It's going to be lumped into an "other" category on the company balance sheet, at least at first, so there's no expectations of an iPhone-like debut with several million sold on the first weekend. The Watch is more of a boost to the iPhone that both lures in converts (get an iPhone and you can get this swanky watch!) and improves loyalty. If it changes the smartwatch industry in the process, that'll be a nice bonus.

 

[ponyo]

Exactly! Apple finally gave users a huge screen iPhone and is where samsung was 2 years ago with the gs3.you can quote this for this time next year when apple doesn't come close to this 1/4 in profits.

Ps samsung gained almost 30% profit from last 1/4 from when it was down 60% but no site is praising samsung for making 30% gains going up against the iPhone 6 and 6 plus.

The big difference is Apple is selling like crazy in China while Samsung is getting their ass kicked there by Chinese Android competitors. Apple has the iOS market all to itself and that's growing like wildfire in China. The question becomes when does the market gets saturated in China. I think that won't happen for another 2 years or so but Apple will continue to print money before and after. Only thing I'm concerned about is the ever increasing crazy sales/earnings expectation for Apple by Wall St. All it takes is one small misstep when expectations are so high. I'm not sold on the upcoming iWatch.

 

[Commodus]

Rather timely: an analyst firm says that Apple now makes 93 percent of the mobile industry's profits.

http://blogs.barrons.com/techtrader...le-profits-650m-users-by-2018-says-canaccord/

There's been talk of Apple having most of the profits before, of course, but it's a reminder of why Samsung's sales drop is a problem. Focusing on market share over profits only works so long as you hold on to that market share forever. And that's usually impossible -- even Microsoft eventually had to admit that Windows lost its stranglehold on computing. If you don't put enough emphasis on profits, you run into real problems if/when your market share goes south.

I don't think companies necessarily have to pursue Apple-level profits, but it's pretty clear that Samsung's profits lean too heavily on sheer volume. My question: can Samsung reinvent itself as a phone maker that's more interested in higher-end, lucrative devices than it is flooding the market? If it does, it's not going to be easy. Samsung has to resist that urge to put out phones for every tiny niche, and seriously rethink a software strategy that revolves around little more than lengthening the feature checklist.

 

[theeedude]

Nothing wrong with volume if you are Samsung and need to fill chip fabs and screen manufacturing capacity. If anything, Samsung has an advantage in a price war for market share over competitors who have to buy those components externally.
What's unrealistic is expectation of differentiated iPhone level profit margins in a commodity Android smartphone market. The only thing sustaining those are carrier subsidies, and those are being supplanted by other business models.
Commodity electronics will gravitate towards HDTV level profit margins and price competition. Apple should be making close to 100% of smartphone profit margin, because Android manufacturers should be only barely profitable on average in a competitive market.

 

[Commodus]

Nothing wrong with volume if you are Samsung and need to fill chip fabs and screen manufacturing capacity. If anything, Samsung has an advantage in a price war for market share over competitors who have to buy those components externally.
What's unrealistic is expectation of differentiated iPhone level profit margins in a commodity Android smartphone market. The only thing sustaining those are carrier subsidies, and those are being supplanted by other business models.

Commodity electronics will gravitate towards HDTV level profit margins and price competition. Apple should be making close to 100% of smartphone profit margin, because Android manufacturers should be only barely profitable on average in a competitive market.

Samsung does have those chip and screen plants, but it's important to remember that it purposefully keeps its supply businesses at arm's length to avoid favoritism. The parent company is just another customer, albeit one that will almost always get a deal.

I hope that there's an Android OEM or two out there that can thrive on an Apple-style profit model (if not at the same profit levels). Otherwise, there's a real risk that Android faces the same problems Windows is facing now: it's all sunshine and roses until the market slows down or shrinks, and suddenly everything is in crisis. A large part of the (apparent) wisdom of Apple's model is that it refuses to ride that market share roller coaster and risk going bust.

 

[oobydoobydoo]

It never ceases to amaze me the number of people on any given tech forum who are always ready to predict Apple's ultimate failure. Yet every year, Apple sells more iPhones than the last. What is the cause of this phenomenon. We are all people who (should) understand technology and therefore, math and science. Yet they can't see that the probability that Apple will fail is so low.... it's absurd.

This thread will be comedy gold when May rolls around and the Apple Watch is released. My prediction? I think Apple will, again, break iPhone sales records with the 6s. I think the Apple watch will be a huge hit. I think Ponyo is crazy to sell his Apple shares right before the release of the first really new Apple product since the iPad. They do it EVERY YEAR. What is it about tech guys that makes them hate Apple so innately? Is it the lack of user tinkering/upgradability?

 

[dawheat]

Commodity electronics will gravitate towards HDTV level profit margins and price competition. Apple should be making close to 100% of smartphone profit margin, because Android manufacturers should be only barely profitable on average in a competitive market.

Strongly disagree about HDTV level of margins. HDTVs have near 0 margins because it's basically just a display and it's been found that consumers put little to no value on other features.

Android phones IMO will be closer to the PC landscape - where it's razor thin at the low end, but there is still room at the high end for higher profits (though not the current 50% margins in the smartphone world).

As smartphones become increasingly powerful, they will continue to become less mini-PCs and more like laptops. Hardware is only plateauing in smartphones for the limited way most consumers use their phones today. There is money on the table and a very large hardware/software curve for the OEMs who can make new productivity use cases mainstream.

The Note series is a precursor to what eventually can be done on smartphones - multi-tasking, more productivity support than most phones, larger high-res screens, S-pen, etc. However it's still in its infancy and more of a experiment of new use cases - some that work, others that don't.

 

[ControlD]

It never ceases to amaze me the number of people on any given tech forum who are always ready to predict Apple's ultimate failure. Yet every year, Apple sells more iPhones than the last. What is the cause of this phenomenon. We are all people who (should) understand technology and therefore, math and science. Yet they can't see that the probability that Apple will fail is so low.... it's absurd.

I would say that precisely because this is a tech forum is why people predict that Apple will eventually falter. I don't see it coming in the immediate future, but I imagine you could replace "Apple"with any number of technology giants (let's put "IBM" in there just for fun) and your statement probably sounds a LOT like what was being said about that company at some point.

I think Apple is safe for awhile now. No tech company is immune to collapse however. A misstep here and there, a shift in markets, etc. and all of the sudden things take a turn for the worse.

 

[theeedude]

Samsung does have those chip and screen plants, but it's important to remember that it purposefully keeps its supply businesses at arm's length to avoid favoritism. The parent company is just another customer, albeit one that will almost always get a deal.

Samsung is Samsung. If they have screen and SOC production capacity sitting idle, their phone business is not all of the sudden going to decide to go with a low volume high end focused business model and cut orders. It's just not going to happen.

 

[oobydoobydoo]

I would say that precisely because this is a tech forum is why people predict that Apple will eventually falter. I don't see it coming in the immediate future, but I imagine you could replace "Apple"with any number of technology giants (let's put "IBM" in there just for fun) and your statement probably sounds a LOT like what was being said about that company at some point.

I think Apple is safe for awhile now. No tech company is immune to collapse however. A misstep here and there, a shift in markets, etc. and all of the sudden things take a turn for the worse.

I agree, but I think it's illogical and counter to what tech forums should have on this issue: Insight. I'm sure one day Apple will fail, they have come close to going out of business before, but to predict now (February 2015) that Apple is going to fail? Very, very unlikely.... they are stronger than they have ever been. I think Apple have room to grow, and I think Apple stock has a lot of room to grow too.

 

[QueBert]

who said anything about most selling phone.I'm talking about its profit gains for the 1/4 and I'll bet you they won't hit anywhere near what they were with the 6s next year as they did now from giving people a bigger phone.

you really think a 6s is going to sell as much as the 6 did to hit there 13 billion mark again?

Ps I predict apple will lose 15-20% profit from year to year q4 / q1 withe the 6s as most people got what they wanted and apple's big screen market gets saturated just like Samsung hit a wall after the gs3.

6s will break previous iPhone sells records, Apple will make more money than the finical sector estimated. Android fans will scratch their head, scowl and say "well, well, well it's because of Apple moron sheeples!" You said most people got what they wanted with the 6 and 6+ so they won't upgrade. The 4 wasn't any bigger than the 3 yet there were people camping out for a week to get it. And the 4 outsold the 3 which both out sold any Galaxy or other phone. I predict the 6s will at worst sell more than the forecast, Apple won't lose a single %. Meanwhile Samsung's going in the other direction and all we get is excuses from the people who like their phones.

 

[ponyo]

I agree, but I think it's illogical and counter to what tech forums should have on this issue: Insight. I'm sure one day Apple will fail, they have come close to going out of business before, but to predict now (February 2015) that Apple is going to fail? Very, very unlikely.... they are stronger than they have ever been. I think Apple have room to grow, and I think Apple stock has a lot of room to grow too.

No one here said Apple is going to fail. They're too big to fail and with $200 billion cash, they could screw up for decades and still laugh it off. Apple stock for whatever reason has always traded at a discount. I've been plenty wrong on Apple stock in the past. If I wasn't wrong, I would have held on to the 15,000 shares (210,000 shares now after all the splits) I bought in late 2000/ early 2001 when Apple was worth $4 billion. Trust me, back then everybody thought Apple was going to fail after the G4 cube disaster.

Problem now isn't about profit. It's the crazy expectations. Apple needs to deliver quarter after quarter of record profits. That drives the stock price short term. If the expectations get too out of line, not even Apple will be able to meet it and the stock will take a short term hit. I never felt bad about taking a profit and I like to get out while the going is good. You think Apple watch will be a big hit. I don't. I've nothing against Apple. It's just business.

 

[Commodus]

Let's face it: at the moment, a lot of the "Apple is dooomed" cries really say more about the person making the predictions than the company. They often stem from that Anything But Apple mentality that has an irrational hatred of anything Cupertino makes -- they want Apple to fail because they can't accept the notion that some people prefer a platform they don't (especially when it resists the tech industry's obsessions with specs and cut-rate prices).

For that matter, both diehard Android fans and financial analysts love to worship at the altar of market share. All they care about in the market is whether a platform has the most units under its belt. Never mind that Apple has nearly all the industry profits, or that many Android vendors are five seconds away from oblivion at any given moment -- Apple is gonna die because it's not the majority. It's short-term thinking at best, and herd mentality ("my platform is better because more people use it") at worst.

Samsung's recent fall from grace seems like a wake-up call, a friendly reminder that market share means nothing if you don't back it up with healthy profits, quality products and long-term loyalty. Otherwise, it's all too easy for someone else to take away your slice of the pie and leave you with nothing.

 

[ControlD]

Let's face it: at the moment, a lot of the "Apple is dooomed" cries really say more about the person making the predictions than the company. They often stem from that Anything But Apple mentality that has an irrational hatred of anything Cupertino makes -- they want Apple to fail because they can't accept the notion that some people prefer a platform they don't (especially when it resists the tech industry's obsessions with specs and cut-rate prices).

For that matter, both diehard Android fans and financial analysts love to worship at the altar of market share. All they care about in the market is whether a platform has the most units under its belt. Never mind that Apple has nearly all the industry profits, or that many Android vendors are five seconds away from oblivion at any given moment -- Apple is gonna die because it's not the majority. It's short-term thinking at best, and herd mentality ("my platform is better because more people use it") at worst.

Samsung's recent fall from grace seems like a wake-up call, a friendly reminder that market share means nothing if you don't back it up with healthy profits, quality products and long-term loyalty. Otherwise, it's all too easy for someone else to take away your slice of the pie and leave you with nothing.

I have to disagree with your analysis of people looking at the market. There is a reason that Apple is rated as "undervalued" and a "buy" from most of the major analysts. What those people care about in the case of Apple is profits. As long as Apple keeps growing their bottom line, the market will love AAPL. As they should.

 

[theeedude]

As a consumer, I don't really care about the profits of company I buy phone from, any more than I care about profits of company I buy my television from. The lower, the better, if you ask me, as long as they have enough money to stay out of bankruptcy during the warranty period.
They put together a commodity battery, screen, and SOC, put a free OS on it and make a commodity product, they should be compensated accordingly, like a commodity manufacturer.
If Intel wants to lose money on Atom SOC, and ASUS is OK with subsistence margins to bring me the Zenfone 2 for $199, it's just fine by me. $400 in my pocket for other stuff

 

[Commodus]

I have to disagree with your analysis of people looking at the market. There is a reason that Apple is rated as "undervalued" and a "buy" from most of the major analysts. What those people care about in the case of Apple is profits. As long as Apple keeps growing their bottom line, the market will love AAPL. As they should.

Ah, there are some analysts who see it that way (I did paint with an overly broad brush, sorry!), but you would be amazed at how many of them really do think that Apple is dead unless it slashes its profit margins and starts making $200 iPhones. All this group sees is "Android at 80% share" and not the legions of companies inches away from bankruptcy.

 

[Dari]

Nothing wrong with volume if you are Samsung and need to fill chip fabs and screen manufacturing capacity. If anything, Samsung has an advantage in a price war for market share over competitors who have to buy those components externally.
What's unrealistic is expectation of differentiated iPhone level profit margins in a commodity Android smartphone market. The only thing sustaining those are carrier subsidies, and those are being supplanted by other business models.
Commodity electronics will gravitate towards HDTV level profit margins and price competition. Apple should be making close to 100% of smartphone profit margin, because Android manufacturers should be only barely profitable on average in a competitive market.

And what's the point of those fabs and plants when Samsung is the primary customer and their sales are falling spectacularly? Treat them like a welfare program and keep producing in spite of the reality going around you? Fact is, vertical integration is a huge asset when everything is going up. You get to mop up every single profit in every aspect of the business. When things are going down, as they are now, it can be catastrophic. Flexible firms like Apple can choose their suppliers and keep their margins. Samsung can't just quit its fabs and plants without hurting itself.

 

[dawheat]

And what's the point of those fabs and plants when Samsung is the primary customer and their sales are falling spectacularly? Treat them like a welfare program and keep producing in spite of the reality going around you? Fact is, vertical integration is a huge asset when everything is going up. You get to mop up every single profit in every aspect of the business. When things are going down, as they are now, it can be catastrophic. Flexible firms like Apple can choose their suppliers and keep their margins. Samsung can't just quit its fabs and plants without hurting itself.

Displays maybe in 2015, but certainly not APs which should be one of the strongest performers in Samsung this year. The 14nm process is looking to be quite impressive and besides taking share from the S810 with the Exynos 7420, Apple, Qualcomm, and Nvidia will be using it.

I agree it can be a weakness as it was in the past, but at least for 2015, their 14nm process looks like it'll make their foundary business outperform.

 

[Mopetar]

And what's the point of those fabs and plants when Samsung is the primary customer and their sales are falling spectacularly?

Actually there are solid rumors that both Apple and Qualcomm will be using Samsung's new process, so it really doesn't matter if Samsung isn't making as many Exynos SoCs.

Also, given that Apple tends to make their chips with larger die spaces than most companies and it means that Samsung doesn't even need to match volume differences in terms of sales of their own or competitor's devices.

The point of the fabs is that even if Samsung's mobile business were to utterly fail (highly unlikely) they would still make money, much like how Sony has terrible results from their mobile division but still makes the camera parts that wind up in many other devices.

 

[Red Storm]

Is this the 3rd Samsung failing thread?

To me it makes perfect sense. Samsung had an abnormally large percentage of the Android market. With the rise of the Chinese OEMs pushing out "good enough" phones at low prices, it was only a matter of time before Samsung started to lose marketshare. No big mystery there, the way Android works it wasn't feasible for Samsung to stay in the same position.

 

[Subyman]

I think I'm like a lot of people, I upgrade when my carrier gives me the discount. I also don't look at the nitty gritty details. iPhone 6S please. Then I get a case and don't worry about it for another 2 years

 

[Dari]

Displays maybe in 2015, but certainly not APs which should be one of the strongest performers in Samsung this year. The 14nm process is looking to be quite impressive and besides taking share from the S810 with the Exynos 7420, Apple, Qualcomm, and Nvidia will be using it.

I agree it can be a weakness as it was in the past, but at least for 2015, their 14nm process looks like it'll make their foundary business outperform.

Fair enough. I know of Samsung, TSMC, Intel and GF. Do these firms switch wrt who has smallest process or is one always in the lead?

Actually there are solid rumors that both Apple and Qualcomm will be using Samsung's new process, so it really doesn't matter if Samsung isn't making as many Exynos SoCs.

Also, given that Apple tends to make their chips with larger die spaces than most companies and it means that Samsung doesn't even need to match volume differences in terms of sales of their own or competitor's devices.

The point of the fabs is that even if Samsung's mobile business were to utterly fail (highly unlikely) they would still make money, much like how Sony has terrible results from their mobile division but still makes the camera parts that wind up in many other devices.

Wrt SONY, actually their mobile sales were up 11% to their highest level ever. But even they see the writing on the wall and are cutting back.