The smartphone maker said it is going through “temporary difficulty” after its underperforming mobile business lost market share for the third consecutive quarter in the three months to September.
Mobile sales plummeted to 23.52 trillion won (£13.9bn) from 35 trillion won (£20.7bn) the previous year as Samsung suffered amid Apple’s dominance of the premium end of the category and intensifying competition in the lower part of the category. Profit for the division plunged 73.9% to 1.75 trillion won (£206m) in the period, its worst performance since the second quarter of 2011.
Samsung says it is “trying” to maintain “steady growth”, fundamentally changing its business structure to boost price competitiveness and use higher-quality components to drive preference among shoppers. It is a model used by the growing number of Chinese brands such as Lenovo and Xiaomi that are mounting serious challenges to the company in emerging markets.
The sales downturn suggests that Samsung’s switch to product porn from a lifestyle positioning for its flagship Galaxy S5 smartphone has failed to win over customers since it launched in April. Its upcoming product shift will likely pivot its marketing priorities toward devices at the lower end of its portfolio with the manufacturer needing to invest considerable amounts to innovate and be more price competitive.
New mid-range models will launch in the fourth quarter.
Kim Hyun-Joon, senior vice president of Samsung’s mobile business, says: “We will fundamentally reform our product portfolio and significantly enhance our competitiveness for each price tier.”
While more Samsung phones were sold in the quarter, they were sold for less, the firm said. “The average selling price of smarpthones declined due to an increased share of middle-to low-end smartphone sales and price reductions of existing smartphone models.”
The business predicts the average selling price for handsets will climb in the fourth quarter due to a rise in premium sales, particularly the Galaxy Note 4, during the festive season.
Samsung retained its position as the world’s biggest smartphone maker in the quarter but it was the only company in the top five to post a sales decline. Apple, Xiaomi, Lenovo and LG Electronics all recorded more than 15% growth in smartphone shipments, according to research firm IDC.