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

[jamezr]

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.

Great points Odev...... i have always liked Samsung phones. I think they make some of the best phones on the market. Not perfect by a long shot but pretty good.
If can see them pulling back a little and maybe not release as many phones going forward. They are not meeting financial expectations right now. So while they have the resources to weather through......they still have investors to answer to.....
Lets see what they come up with as far as bendable/foldable screens for phones in the next couple of years.

 

[JaySoul]

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.

That's fair enough but like Google, it can also be frustrating when they come up with something great and either mess it up or don't commit to it.

The K Zoom is a great example - last year, an interesting if flawed starting point. This year, much better but still too many concessions (ironically with the camera, not the smartphone). Next year, I reckon if they don't crack it, they'll drop it.

 

[ucfgrad93]

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).

This is also true in the tablet line. They introduced the Tab Pro in January and it has already been replaced by the Tab S line.

 

[Stuntman06]

I don't see smaller manufacturers affecting Samsung sales in North America. Most people go to their carrier to buy a phone. You'll get the phones by major brands and likely won't see any of these cheaper phones there.

 

[SmurfBoxMasta]

Well, all some good points of view and some more than others, AND we have a good discussion going, which was my intent from the beginning

And in case anyone is wondering, I own 2 Samsung Galaxy Nexus phones, 3 Sammy TV's. I recently bought one of their Fridges also. And previously all 4 phones in my house were sammys too......Why you ask ?

Because they had the products I wanted at the price points I wanted and with most of the important features I wanted too.....

So again, I am not a Sammy fanboi nor am I raggin on them. I merely wanted to discuss the fact that they can AFFORD to do pretty much whatever they want in the phone arena, be it right, wrong or half-assed, 'cause they have multiple other revenue streams to help offset any losses they may suffer should they possibly lose a few points of market share here & there. And dollars are dollars, regardless of which division brings them in, they ALL count towards their overall bottom line, which for the moment at least, appears to be rather hEaLtHy.....

but ps: My phone contracts are up next month, and I have been eyeing phones from several different mfgr's, including but not limited to Samsung

 

[EbookReader]

I don't see smaller manufacturers affecting Samsung sales in North America. Most people go to their carrier to buy a phone. You'll get the phones by major brands and likely won't see any of these cheaper phones there.

Give it time.

As "no subsidy" become more popular, more and more people will buy phones from places other than carriers.

Why buy a top of the line device for $650 from your carrier when you can buy an equally as good top of the line device for $300 online?

 

[jamezr]

Give it time.

As "no subsidy" become more popular, more and more people will buy phones from places other than carriers.

Why buy a top of the line device for $650 from your carrier when you can buy an equally as good top of the line device for $300 online?

I agree...I think (hope) this is trend here in the US so we can catch up to the rest of the world. We should be able to buy any phone and not be bound to any carrier. With TMO shaking up the mobile space with no contract advertising maybe the US mobile space will move to one phone for all carriers (except Verizon) and be GSM as the rest of the world is....

 

[rui no onna]

I agree...I think (hope) this is trend here in the US so we can catch up to the rest of the world. We should be able to buy any phone and not be bound to any carrier. With TMO shaking up the mobile space with no contract advertising maybe the US mobile space will move to one phone for all carriers (except Verizon) and be GSM as the rest of the world is....

Meh, while Verizon is dragging its feet moving to a more GSM model, Sprint is even worse. I do like the trend of moving away from the subsidized model.

 

[kdarling]

... maybe the US mobile space will move to one phone for all carriers (except Verizon) and be GSM as the rest of the world is....

Actually, it's more the other way around.

Although they've said they'd support 3G almost through the end of the decade, US carriers want to go totally LTE, and get rid of their older CDMA and GSM / UMTS-3G networks. (AT&T plans to drop GSM 2G as soon as 2017.)

So eventually everything will be LTE, with maybe some legacy UMTS-3G for a while for overseas visitors.

 

[tjl3]

Give it time.

As "no subsidy" become more popular, more and more people will buy phones from places other than carriers.

Why buy a top of the line device for $650 from your carrier when you can buy an equally as good top of the line device for $300 online?

Well, first it's because it is online. That is a major inconvenience. Consumers are accustom to seeing the device in store. Buying online is going to be a tough challenge, let alone ordering from China of all places.

The lack of marketing and exposure is another thing. Most have never heard of Xiaomi, Oppo, OnePlus or any of these Chinese companies.

Samsung has no issues selling the GS5. According to that article, the GS5 made record sales, and it was at other price points that they are getting killed. Which makes sense b/c consumers are getting more at the other price points.

And then there is the fact that financing exists. $199 down with no interest on an iPhone 6. The consumer doesn't even get fazed if subsidies ended.

 

[jamezr]

Actually, it's more the other way around.

Although they've said they'd support 3G almost through the end of the decade, US carriers want to go totally LTE, and get rid of their older CDMA and GSM / UMTS-3G networks. (AT&T plans to drop GSM 2G as soon as 2017.)

So eventually everything will be LTE, with maybe some legacy UMTS-3G for a while for overseas visitors.

Isn't LTE GSM using a sim? The old CDMA did not need a sim.......

 

[0dev]

Well, first it's because it is online. That is a major inconvenience. Consumers are accustom to seeing the device in store. Buying online is going to be a tough challenge, let alone ordering from China of all places.

Really? If anything the opposite is true. Highstreet retailers are suffering specifically because more customers order online nowadays and having to take the time to go to a physical shop to look at phones and get lied to by a salesman who doesn't know anything is more of a hassle for customers than going on a website and picking the one they like. Either that or they ring up their network and get an upgrade sorted over the phone. Physical shops are on the way out.

The lack of marketing and exposure is another thing. Most have never heard of Xiaomi, Oppo, OnePlus or any of these Chinese companies.

This is true, but the internet makes advertising very easy for such companies if they wanted to break into Western markets. Right now I see no evidence of them wanting to do that but I have no doubt they could. Huawei is a perfect example of a company doing this well. In the UK they sell phones with the specs of ~£300 devices for ~£150 and make a lot of sales doing it. They're stocked online and in all major retailers and they advertise pretty often. Nowhere near like what Samsung does but enough to get decent sales. And that's a Chinese company no one can even pronounce the name of.

Samsung has no issues selling the GS5. According to that article, the GS5 made record sales, and it was at other price points that they are getting killed. Which makes sense b/c consumers are getting more at the other price points.

Yep. Samsung's budget offerings are awful compared to the likes of the Moto G and others. They need to stop selling phones with Gingerbread for a start. Not at all surprised they're being killed at the lower end with the kind of crap they put out.

And then there is the fact that financing exists. $199 down with no interest on an iPhone 6. The consumer doesn't even get fazed if subsidies ended.

In most countries this is not the case though. It's true in the US and UK that buying into a 24 month contract gets you a cheap phone (in fact most of the time in the UK you get the phone itself for free, Stateside you get far worse deals than the UK on phone contracts) but in most of Europe and Asia people buy the phone outright, unlocked, and change networks whenever they feel like it. Which is a better way of doing things IMO, and it's what I do. But regardless of whether or not you agree, fact is in these markets the true price of the hardware matters. The whole world is not America. So if Samsung wants to get better sales in the wider world they need to offer better hardware for less money.

Notice also how iOS owns only a tiny share of the market in most countries outside the US? This is why. The hardware is too overpriced for anyone to bother buying it. In the US and UK this isn't as much of a big deal for most people with contracts but in Europe and Asia it puts people off big time. Apple doesn't care, of course, because their whole game is to only sell high end products, but Samsung provides for all ends of the market and it's plain to see that their low to mid range offerings have been awfully bad value for a while.

 

[Stuntman06]

Give it time.

As "no subsidy" become more popular, more and more people will buy phones from places other than carriers.

Why buy a top of the line device for $650 from your carrier when you can buy an equally as good top of the line device for $300 online?

The norm in North America right now is to buy phones from carriers. Although plans for bringing your own device are available, they are not publicised. You have to really search before you find out about it. When you finally do find it, you have to start doing the math to find out how much you'll save.

Carriers continue to push contracts and subsidised phones. The ads are everywhere. You never see an ad for an unsubsided phone anywhere. You may see the rare ad for a plan where you bring your own device. You go to a typical phone store and practically all of the phones are carrier locked. The only ones that aren't are old models that suck (at least that was the case a few years ago when I asked at a phone store). Maybe the trend will change, but North American carriers are doing their best to give the impression that the place to buy a phone is through the carrier.

 

[tjl3]

Really? If anything the opposite is true. Highstreet retailers are suffering specifically because more customers order online nowadays and having to take the time to go to a physical shop to look at phones and get lied to by a salesman who doesn't know anything is more of a hassle for customers than going on a website and picking the one they like. Either that or they ring up their network and get an upgrade sorted over the phone. Physical shops are on the way out.

You have some people who are completely internet illiterate. And you have others who have no clue what they want. But people inherently prefer to see the product in person before purchasing it. I just don't think 3 or 4 Chinese companies can sell Americans on the idea of partially blindly buying a device and having it shipped from overseas.

Notice also how iOS owns only a tiny share of the market in most countries outside the US? This is why. The hardware is too overpriced for anyone to bother buying it. In the US and UK this isn't as much of a big deal for most people with contracts but in Europe and Asia it puts people off big time. Apple doesn't care, of course, because their whole game is to only sell high end products, but Samsung provides for all ends of the market and it's plain to see that their low to mid range offerings have been awfully bad value for a while.

Yup, I mean US only. I honestly don't think the total cost is the issue, it is the down payment.

 

[0dev]

You have some people who are completely internet illiterate. And you have others who have no clue what they want. But people inherently prefer to see the product in person before purchasing it. I just don't think 3 or 4 Chinese companies can sell Americans on the idea of partially blindly buying a device and having it shipped from overseas.

These are not the target customers for smartphones though. People like this are why dumbphones are still being produced (well, them and drug dealers). I was talking to a guy who works for a major phone shop chain here and he said the people you are referring to here won't be around much longer if you get me.

Of course if those Chinese companies want to compete in the US then they will need to ship the phones from US warehouses, that's pretty obvious. They would do what Huawei already did and set up a US storefront to sell to the American market.

Yup, I mean US only. I honestly don't think the total cost is the issue, it is the down payment.

But I ask you, if companies like Huawei keep selling unlocked bloatware free high spec smartphones for the same price as you're used to paying upfront for a contract phone, why would you keep buying phones on 24 month contracts? Much cheaper for you to just buy a $200 phone outright and save on your monthly bill without having to commit to 24 months. T-Mobile in the US are already running marketing campaigns convincing people to do just that.

 

[tjl3]

These are not the target customers for smartphones though. People like this are why dumbphones are still being produced (well, them and drug dealers). I was talking to a guy who works for a major phone shop chain here and he said the people you are referring to here won't be around much longer if you get me.

Of course if those Chinese companies want to compete in the US then they will need to ship the phones from US warehouses, that's pretty obvious. They would do what Huawei already did and set up a US storefront to sell to the American market.



But I ask you, if companies like Huawei keep selling unlocked bloatware free high spec smartphones for the same price as you're used to paying upfront for a contract phone, why would you keep buying phones on 24 month contracts? Much cheaper for you to just buy a $200 phone outright and save on your monthly bill without having to commit to 24 months. T-Mobile in the US are already running marketing campaigns convincing people to do just that.

I get what you are saying. But I think the reality is different.

Have you ever bought a PC without at least demoing or feeling out a similar model? The average consumer isn't going to play hot potato by shipping phones back and forth until they find the one they like.

 

[0dev]

I get what you are saying. But I think the reality is different.

Have you ever bought a PC without at least demoing or feeling out a similar model? The average consumer isn't going to play hot potato by shipping phones back and forth until they find the one they like.

You can still walk into a Best Buy or something to try out the various phones though right? From what I've seen most people use shops as showrooms for Amazon if they want to try out the hardware beforehand.

 

[Technarchy]

Great points Odev...... i have always liked Samsung phones. I think they make some of the best phones on the market. Not perfect by a long shot but pretty good.
If can see them pulling back a little and maybe not release as many phones going forward. They are not meeting financial expectations right now. So while they have the resources to weather through......they still have investors to answer to.....
Lets see what they come up with as far as bendable/foldable screens for phones in the next couple of years.

Samsung is completely off the wall insane with their releases and it has to be draining on their finances.

As Tim Cook and Steve Jobs use to say: "put your wood behind a few arrows."

Carpet bombing with god knows how many phones and 13 tablets in 8 months is just ridiculous.

To quote the verge:

t's easy to look down on Samsung and the tablets it relentlessly churns out. It's practically impossible for anybody but the techiest of tech geeks to remember the tiny differences between them, especially since they all look basically the same. Flooding the market with subtly different variations on the same tablet, hoping that one of them will catch fire, doesn't seem like a great plan.

 

[jamezr]

Samsung is completely off the wall insane with their releases and it has to be draining on their finances.

As Tim Cook and Steve Jobs use to say: "put your wood behind a few arrows."

Carpet bombing with god knows how many phones and 13 tablets in 8 months is just ridiculous.

To quote the verge:

But then......its worked for them so far. They sell more phones than anyone else.......

 

[tjl3]

You can still walk into a Best Buy or something to try out the various phones though right? From what I've seen most people use shops as showrooms for Amazon if they want to try out the hardware beforehand.

My point is only that if these Chinese phones don't show up in showrooms, it is a hard sell on Americans. If tomorrow, carriers dropped subsidies, it is a tough sell based on price alone.

There is still a marketing component that is missing.

 

[EbookReader]

My point is only that if these Chinese phones don't show up in showrooms, it is a hard sell on Americans. If tomorrow, carriers dropped subsidies, it is a tough sell based on price alone.

There is still a marketing component that is missing.

It's not that tough of a sell without marketing.

If carriers dropped subsidies, and you have Note 3 at $700 and OnePlusOne with great reviews at $350 with these specs

Snapdragon 801 SoC
3GB RAM
13-megapixel camera
3,100mAh battery
5.5-inch 1080p display
LTE
16 GB storage for $299 or 64GB storage for $349

a good number of Americans will find out about it. Some of those that know about it will buy it over the Note 3.

 

[0dev]

It's not that tough of a sell without marketing.

If carriers dropped subsidies, and you have Note 3 at $700 and OnePlusOne with great reviews at $350 with these specs

Snapdragon 801 SoC
3GB RAM
13-megapixel camera
3,100mAh battery
5.5-inch 1080p display
LTE
16 GB storage for $299 or 64GB storage for $349

a good number of Americans will find out about it. Some of those that know about it will buy it over the Note 3.

Yeah word would spread, and it's not like it's difficult for these companies to advertise on the internet and set up a warehouse in the USA is it? Huawei has already done it and more will only follow in the future. Huawei also has their phones stocked in shops.

 

[tjl3]

Yeah word would spread, and it's not like it's difficult for these companies to advertise on the internet and set up a warehouse in the USA is it? Huawei has already done it and more will only follow in the future. Huawei also has their phones stocked in shops.

Take Huawei out of the equation b/c I know their devices are in carrier stores so obviously they have product state side. I know what you all are saying. And I deal with sales indirectly (not for mobile) all the time. You'd be surprised at how receptive the general public is.

If you are talking about this forum's users, sure these phones are going viral for their price. But when you are talking about the other ~100s of million customers that purchase iPhones and Galaxys, it is about what is new. It is about what they see on TV, what others are using. Apple rarely boasts specs publicly and iPhone still sells.

And like I said, I get what you are saying, but at the very least OnePlus and Xiaomi would need to move in via showrooms =D

 

[Savor]

I really like Xiaomi's idea of "flash sales." It builds anticipation as most bargain shoppers love to be part of a rat race. Every announcement on Xiaomi FB page makes it feel like a Cyber Monday. I really would like Mi 3 and it is available through the Lazada but Mi 4 announcement is just around the corner by July 22nd.

 

[EbookReader]

I really like Xiaomi's idea of "flash sales." It builds anticipation as most bargain shoppers love to be part of a rat race. Every announcement on Xiaomi FB page makes it feel like a Cyber Monday. I really would like Mi 3 and it is available through the Lazada but Mi 4 announcement is just around the corner by July 22nd.

flash sales have done wonder for Xiaomi.

2012: ~8 mil sold
2013: ~18 mil sold
2014: expecting 60 mil sold
2015: expecting 100 mil sold