$250 off-contract for high end smartphones putting pressure on Samsung

[EbookReader]

For example, Xiaomi Mi3 is selling for $250 in several markets

Its specs:

5.0-inch, 1920x1080 resolution IPS panel from LG or Sharp, Qualcomm Snapdragon 800 SoC with quad-core 2.3GHz CPU and Adreno 330 GPU, 2GB RAM, 16GB internal storage (non-expandable), 13 megapixel rear camera, 2 megapixel front camera, 3050mAh battery and MIUI 5 on Android 4.3.

It is important to note that while the Xiaomi phones don't come with the Play Store and Google apps in China, they will support them in India.

It is putting pressure on Samsung profit:

Samsung says second-quarter profit will likely fall as much as 26.5% from a year earlier.

Xiaomi is able to sell high end devices at so low a price because of 2 things

1) no marketing (save a lot of money)
2) online sales (cutting out the middleman)

 

[JaySoul]

Yeah it's interesting.

China makes so much of this stuff, it is only natuaral that their own companies branch out.

A phone like that with stock Android at that pricepoint would just clean up, hence with Google has had some negotiating to do this year.

 

[FelixDerKater]

Sell for margins or sell for volume. Apple happens to be able to do both.

 

[mclld]

Good, I like to see some pressure and competition..that just means better things for the consumer

 

[ucfgrad93]

According to Android Central, Samsung's second quarter profits fell 24%.

http://www.androidcentral.com/samsung-sees-24-profit-decline-q2-smartphone-demand-weakens

 

[jamezr]

Sell for margins or sell for volume. Apple happens to be able to do both.

They do make a HUGE profit but not market share.

Global Smartphone Market Share Trends - Q1 2013: Android Extends Lead Over IPhone, Windows Phone Performance Mixed

2014 Data tooo....

 

[Lloydbm41]

Sell for margins or sell for volume. Apple happens to be able to do both.

Apple does both in only a few countries. Worldwide though, Apple does not. It's because of those margins that it lacks volume in 95% of the world.

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For example, Xiaomi Mi3 is selling for $250 in several markets

Its specs:



It is putting pressure on Samsung profit:




Xiaomi is able to sell high end devices at so low a price because of 2 things

1) no marketing (save a lot of money)
2) online sales (cutting out the middleman)

I disagree. Samsung is killing itself because all they are doing is making 100 different variations of the Galaxy S3/S4/S5. Samsung seems as though they can't figure out how to design something else, so they rehash the same phone and call them mini's, micro's, mega's, etc.
People are getting tired of the same phone design and see little reason to upgrade. Samsung doesn't have the same loyalist buyers as Apple (who buy the next Apple product regardless of what it is).

 

[0dev]

I do think pretty much all smartphone makers overprice their flagships. Even here in the UK where the norm is to get new phones for free on 24 month contracts I know people who've got Nexus 5's and Moto G's purely because of the value for money. With Sammy dropping in profit I think they need to start selling their flagships for the closer to the price Google sells the Nexus phones. With Samsung producing many of the internal components themselves, and with their massive infrastructure, they'd still be able to make profit on devices even selling them at those prices, while most of their competitors would never be able to drop to that price without losing money. This would provide them with a massive competitive advantage, particularly in Europe and Asia where a lot more people buy phones outright rather than get the phones with no cost upfront on a contract as they do in the UK and US.

Also Samsung needs to make a decent ~£150 device. Motorola has that market cornered right now with the G and X while Samsung only offer the awful Galaxy Ace and Fame devices. The more decent Galaxy Mini devices are around the £250-300 range which is a rip off. Make the Galaxy Mini devices £150, scrap the crappy Ace and Fame devices, and they will take that market from Motorola overnight.

 

[aeboi]

Google subsidizes the N5 phones a little bit. The price you pay by purchasing it from a carrier would be the real retail price. Plus LG has to cut corners somewhere to bring it to that price.

 

[0dev]

Google subsidizes the N5 phones a little bit. The price you pay by purchasing it from a carrier would be the real retail price. Plus LG has to cut corners somewhere to bring it to that price.

I wouldn't expect the price to be equal, I know Google makes no real profit on Nexus devices because they're selling people into their ecosystem. I'm just saying the flagship prices should be closer. This Chinese company can do that after all.

Also carrier prices are not the "real retail price" - carriers subsidise phones a lot more than Google does. The SIM free price is the true price of the hardware. For most flagships that's around £500.

 

[bean dip]

Who the hell cares. What has Samsung done for any of us, or the industry for that matter.

 

[0dev]

Who the hell cares. What has Samsung done for any of us, or the industry for that matter.

Made some cool phones? Made the phablet popular? Made some really nice screens? Made the SoCs that power iPhones? I mean come on, you may not like Samsung - and I really don't understand the intense hate the geek community seems to have for them - but you can't deny they've had a big impact on the smartphone market.

 

[Robster3]

Apple does both in only a few countries. Worldwide though, Apple does not. It's because of those margins that it lacks volume in 95% of the world.

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I disagree. Samsung is killing itself because all they are doing is making 100 different variations of the Galaxy S3/S4/S5. Samsung seems as though they can't figure out how to design something else, so they rehash the same phone and call them mini's, micro's, mega's, etc.
People are getting tired of the same phone design and see little reason to upgrade. Samsung doesn't have the same loyalist buyers as Apple (who buy the next Apple product regardless of what it is).

I agree and that's why those figures posted above your post mean exactly 0.

 

[rui no onna]

Apple does both in only a few countries. Worldwide though, Apple does not. It's because of those margins that it lacks volume in 95% of the world.

True. Also, part of the reason Apple can sell in such large volumes in the US is due to carrier subsidies for 2 year contracts. That makes for pretty regular purchases by contract end date. Take away the subsidy or introduce significant monthly plan discounts for BYOD or off-contract (ours was $80/mo savings for 4 lines or $1,920 for 2 years) and you'll likely see more people keeping their phones for longer.

 

[Shanghaichica]

Made some cool phones? Made the phablet popular? Made some really nice screens? Made the SoCs that power iPhones? I mean come on, you may not like Samsung - and I really don't understand the intense hate the geek community seems to have for them - but you can't deny they've had a big impact on the smartphone market.

Driving Android. We are techies and we know of other Android OEM's, but to the vast majority of the general public Samsung =Android.

People may hate Samsung but they deserve credit for what they have done for android.

 

[JaySoul]

Samsung are idiots.

They just shoot every possible phone at the market, they must waste billions in R&D and what they should have is a range of 5 smartphones.

5.1" S5.
Same spec S5 with a 4.7" screen
Note 4.
A Moto G competitor.
A luxury effort for a laugh.

Do that, ditch the bloatware and they would clean up even more whilst reducing overheads.

 

[Shuri]

Samsung are idiots.

They just shoot every possible phone at the market, they must waste billions in R&D and what they should have is a range of 5 smartphones.

5.1" S5.
Same spec S5 with a 4.7" screen
Note 4.
A Moto G competitor.
A luxury effort for a laugh.

Do that, ditch the bloatware and they would clean up even more whilst reducing overheads.

Even worse: What are actions they claimed to do, now that their quarter was worse than expected: Even more money in marketing? Which already has more money to throw out than any other smartphone maker..

 

[SmurfBoxMasta]

It appears that alot of people are missing 1 very important point here in regards to samsung:

they have numerous other products in a wide variety of industries and markets that other cell phone mfgr's don't have and they have the correspondingly HUGH bank account to go along with it Hell they even make alot of the chips that go into other company's (Apple) cell phones too...."more fingers in the pie"

Therefore they can easily afford the R&D, marketing, and other costs associated with flooding the markets with whatever type/size/kind/style of phones they think people will buy.

Do they sell millions of every one of them ? NO, but that doesnt matter so much when you have the majority of the markets covered and so many models to choose from.....

Are all of their phones necessarily the best phones available ? NO, but the same as above also applies here...

ps... I'm not advocating anything for or against samsung, good, bad or otherwise, just giving my opinion on their market positions. They are who/what they are, and all of the debates here or anywhere else isn't gonna change that any time soon

 

[maflynn]

I think Samsung is competing on two fronts where as Apple is fighting its war on one front.

Samsung produces both low end and high end phones. They're fighting the chinese makers on the low end and apple on the high end. Not just apple, since they're trying to compete with other android makers as well, such as Sony, HTC (though HTC is largely losing) and Motorola to name a few.

This is putting a lot of pressure on Samsung, and with a slowing smartphone market, at least as they report it, then that makes the competition even fiercer

 

[JaySoul]

It appears that alot of people are missing 1 very important point here in regards to samsung:

they have numerous other products in a wide variety of industries and markets that other cell phone mfgr's don't have and they have the correspondingly HUGH bank account to go along with it Hell they even make alot of the chips that go into other company's (Apple) cell phones too...."more fingers in the pie"

Therefore they can easily afford the R&D, marketing, and other costs associated with flooding the markets with whatever type/size/kind/style of phones they think people will buy.

Do they sell millions of every one of them ? NO, but that doesnt matter so much when you have the majority of the markets covered and so many models to choose from.....

Are all of their phones necessarily the best phones available ? NO, but the same as above also applies here...

ps... I'm not advocating anything for or against samsung, good, bad or otherwise, just giving my opinion on their market positions. They are who/what they are, and all of the debates here or anywhere else isn't gonna change that any time soon

I don't think anyone is missing that point. My fridge is a Samsung and it's excellent.

When talking about their phone strategy, that's become their most visible market. And they aren't running it efficiently/smartly.

 

[Savor]

Applies as well to OnePlus for trying to emulating Xiaomi's strategy.

China brands are getting better. Same with local branded phones here in the Philippines which are made in China. MyPhone released the Rio a few months ago for only $113 equivalent. Quad core, 1 GB, HD display, and good camera. We are getting there when it comes to saturation point and the eventual sub-$100 with respectable specs. Many octa-core phones are already appearing here locally for $250.

What makes Xiaomi Mi 3 such a big deal is the fact it is a $250 smartphone which doesn't have year-old or two-year old specs. It's benchmark scores that beats 2014 smartphones but technically it was released just last Dec 31, 2013 after a September announcement. And it doesn't have many true weaknesses except maybe the 16 GB internal memory only and no 4G. Also I wished it could be a little smaller and they used micro-sim with dual slots. But that's personal taste. But stuff like SPEED, BUILD QUALITY, CAMERA, BATTERY LIFE, and PRICE which are generally the most important to people are all great. 10M sold and that's in just mostly in one country.

I hope Xiaomi, OnePlus, and whatever company continues to hurt Samsung in sales. Samsung puts out inferior build quality to some local brands like 0+, MyPhone, yet charges alot more for it. Brand recognition can be overrated sometimes.

 

[Rodster]

I've been off contract since 2009. Late last year I switched from Boost Mobile to Straight Talk. ST will sell you anything from iPhones to the Galaxy S. I chose the Nexus 4 because of a) price $199 and b) it was straight Android.

So for me both Apple and Samsung were in the same group, i.e. both sold overpriced phones.

 

[The Game 161]

Way of the world there are a crazy amount of low cost options out there

 

[chagla]

a lot of companies are offering high end phones for cheap. so big guys like samsung, htc, lg and the likes will feel the pinch. meanwhile apple can continue to charge as high as they like and loyal fans will continue to buy.

 

[0dev]

It appears that alot of people are missing 1 very important point here in regards to samsung:

they have numerous other products in a wide variety of industries and markets that other cell phone mfgr's don't have and they have the correspondingly HUGH bank account to go along with it Hell they even make alot of the chips that go into other company's (Apple) cell phones too...."more fingers in the pie"

Therefore they can easily afford the R&D, marketing, and other costs associated with flooding the markets with whatever type/size/kind/style of phones they think people will buy.

Do they sell millions of every one of them ? NO, but that doesnt matter so much when you have the majority of the markets covered and so many models to choose from.....

Are all of their phones necessarily the best phones available ? NO, but the same as above also applies here...

ps... I'm not advocating anything for or against samsung, good, bad or otherwise, just giving my opinion on their market positions. They are who/what they are, and all of the debates here or anywhere else isn't gonna change that any time soon

This is a good point, they can do whatever the hell they like because it's not like every single industry they're in is going to die anytime soon. Their phone business could nosedive like HTC and Samsung would still have the money to make 10 different models to try and get back in the game.

I see them criticised a lot for making so many phones but it's actually my favourite thing about Samsung. They have the ability to experiment. They're like the Google of hardware. They just make everything they can conceivably think of and see how well it does. This is why the Note series came about, it was just another one of Samsung's experiments that happened to get popular. And they can go "sure, let's make a smartphone with an optical zoom, why the **** not?" It's a strategy that works for Samsung because they can afford it and as a geek I think that is awesome.