Samsung has quietly released some pessimistic profit predictions, indicating that, despite netting a respectable profit in the Smartphone business last quarter, 2020 could be an even trickier year for the Korean giant.
We haven’t seen any new flagship handsets from Samsung this year, but we’ve heard a lot of rumours regarding the firm’s plans for 5G and foldables. Despite being hot topics in the world of tech, experts have doubts about the financial success of these headline features.
“Consumer awareness of 5G is increasing rapidly and there is certainly interest but the reality is that the jump from 4G to 5G is not nearly as compelling as the jump from 3G to 4G,’ says Dominic Sunnebo, Director for Consumer Insights at Kantar. ‘[Consumers] are prepared to pay some premium for 5G, but it will not fundamentally change the market value.”
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Foldables, another big push area for Samsung, aren’t predicted to make a big splash this year either. Although there’s a lot of buzz surrounding the new bendy products, experts say it will be a long time before these devices are the norm in the market.
Talking about the trend, Forrester industry analyst Thomas Husson said, “I don’t think foldables will play a big role in 2020. We will hear a lot about them, there will be hype but these products are still too expensive to generate significant sales, and they offer limited benefits.”
Samsung had moderately successful sales in its last financial quarter, although this was mainly thanks to the company’s mid-range A series, rather than sales of flagship handsets.
If it wants to change the fortunes of the upcoming S11, the company may have to shift its strategy. “The challenge for Samsung is to ensure the quality of the A series does not lead to cannibalisation of its S, Note and Fold offering,” says Sunnebo.
In addition to this, the company now has to deal with the prices being offered by its behemoth competitor, Apple.
“The big headache Samsung has is the pricing structure Apple went with for its iPhone 11,” Sunnebo explains. ‘This puts significant pressure on Samsung to either limit the cost increase of its S11 model, or bring out at launch a more affordable version.”
Husson doesn’t think that the company’s pessimistic Q4 predictions reveal too much. “At this stage, I don’t think the negative predictions say anything about future demand for [Samsung’s] premium smartphones,” he said.
But it certainly looks like Samsung has a tricky tightrope to walk in 2020.