What Nokia was ten years ago, Samsung is today. It was Samsung with its aggressive strategy that managed to dethrone Nokia from the throne of the mobile market and replaced it, thanks to which Samsung is now the manufacturer with the largest number of mobile phones sold in the world. Well, even though Samsung is the biggest, its piece of the pie is slowly starting to shrink thanks to the growing popularity of Chinese manufacturers, and at the same time, there was a 20% drop in net profit, as well as a drop in gross margin, which fell to 19% and, according to analysts, possibly more will fall.
According to analysts, Samsung was at its best in 2012, when it launched the Samsung phablet Galaxy Note 2. The Note 2, which is still popular, as the company reported a gross margin of 25% in the next quarter after its introduction. Since then, however, the gross margin has been slowly declining and is expected to continue to decline. Now the gross margin has fallen to 19% and it is expected that next year it will be only 15%. The problem, according to analysts, is precisely that Samsung has to start defending itself against growing Chinese competition, and the only way it can achieve this is to reduce the prices of its products - which will also reduce the amount of the gross margin. Samsung must either come up with innovations that will "kick" its business again, or we will have to count on declining profits from the sale of mobile phones.
*Source: WSJ
