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After delivering a poor fourth quarter financial report in 2014, all eyes are on how Samsung Electronics will reverse its five consecutive quarters of decline in 2015. Perhaps it is because of insufficient market expectations or the lack of a rebound effect, Samsung Electronics' expectations for the second quarter financial report are still not optimistic.
International mobile phone giants that were once very popular in the Android market seem to be losing their control over the Chinese market. Not only Samsung, but also HTC, LG, and Sony Mobile have been competing in the Chinese mobile phone market in the first half of this year. "collective frustration" may be the most appropriate word to describe the performance of international Android brands in the Chinese market.
"The competition in the Android market is too fierce, and many consumers were not particularly satisfied with their experience in the past, which is why many people have turned to Apple. At the same time, the change in mobile phone operating models in the Chinese market may have made these giants feel a little uncomfortable." Wang Jiping, research director of IDC China, told China Business News that the Android mobile phone market will enter a stalemate in the second half of the year, and whether they can break through the competition depends on their leading innovation and operating models.
Disappointing “report card”
It is that time again when mobile phone manufacturers release their semi-annual reports intensively, and some are happy while others are worried.
On July 7, Seoul time, Samsung Electronics (005930.KS) said that its operating profit for the April-June quarter is expected to be lower than expected, with an initial estimate of operating profit down 4% from the same period last year to 6.9 trillion won (6.13 billion U.S. dollars), lower than the average forecast of 7.2 trillion won by 39 analysts interviewed by Thomson Reuters I/B/E/S. The company said revenue may fall to 48 trillion won, down 8.4% from the same period last year.
Analysts have lowered their second-quarter profit forecasts for Samsung's mobile phone division on the grounds that demand for Samsung's standard flagship phone Galaxy S6 was weaker than expected. Although demand for the Galaxy S6 Edge with a curved screen exceeded expectations, supply could not keep up with demand due to greater production difficulties.
HTC also suffered a decline. Due to the decline in smartphone sales and losses caused by idle production lines, HTC suffered losses again in the second quarter. The unaudited second quarter financial report reported on July 6 showed a net loss of NT$8.03 billion (approximately RMB 1.61 billion). Although the performance of specific regions has not been announced, from various analytical data, the poor performance of the Chinese market has become one of the reasons for the unsatisfactory performance of international Android manufacturers.
"The change in operating model may make it difficult for international brands to adapt." Wang Jiping told our reporter that under the trend of mobile Internet in China, the operating model of mobile phone manufacturers has undergone various changes. From the growth of e-commerce two years ago to the recent gameplay of emerging manufacturers such as LeTV, the business model is constantly innovating, including concepts such as Diaosi and Geek, which have also brought new ideas to various embedded advertisements in mobile phones.
"Samsung's adaptability to the market is not very strong, such as the Chinese e-commerce market. Even in social channels, Samsung is losing more and more market share due to the rise of local brands such as Huawei and OPPO." Wang Yanhui, secretary-general of the China Mobile Alliance, told our reporter.
Samsung's high-price strategy has gradually lost its advantage due to cheaper and more localized market strategies, and this differentiation began to emerge as early as last year.
According to IDC data, Samsung's market share in China in the fourth quarter of 2014 has dropped from 20% at the beginning of the year to 8%, and has been overtaken by Chinese manufacturers for three consecutive quarters, with Huawei, Lenovo and Xiaomi all ahead of it. A Samsung mobile phone channel agent in Guangzhou told the reporter of China Business News that Samsung's single-store sales performance has declined in the past year, and its authorization in e-commerce channels has not been very good. On platforms such as JD.com and Tmall, it can be seen that domestic brands and Apple basically dominate the market.
"Global brands have to take changes in each region into consideration, while Chinese companies are more focused on local changes. Domestic mobile phones have more advantages at this level." Wang Jiping explained to our reporter that the Android market as a whole is actually in a state of "over-competition". When brands such as Huawei and Xiaomi entered the market, the market no longer had only a few players.
Regarding overseas markets, Wang Yanhui believes that Samsung is under pressure from Chinese and local brands in the Asian, African and Latin American markets, and from Apple in the European and American markets. This is the fundamental reason for its global decline.
When Samsung released its first quarter financial report, it summarized that Samsung Electronics' net profit fell sharply in the first quarter due to consumers switching to Apple's large-screen iPhone and the appreciation of the Korean won, which made devices more expensive in overseas markets. In the industry's view, Apple's rebound in overseas markets has really dealt a heavy blow to Samsung.
Who will lead
Who will lead the Android phone market in the second half of the year?
Wang Jiping believes that there is no conclusion yet and the Android market will be in a stalemate in the second half of the year.
On the one hand, Samsung is looking for ways to boost its performance. Sources said that Samsung has begun to adjust its production capacity to produce more Galaxy S6 Edge phones according to market demand, and to strengthen investment in semiconductor and other technologies in order to be more competitive in the future.
But on the other hand, domestic blocking teams led by Huawei and Xiaomi are also launching attacks on Samsung's main Android market.
"It's not just the domestic market. The outside world can look forward to Huawei's performance overseas in 2015. Huawei will launch a fierce offensive in some key areas to challenge the markets of Apple and Samsung." A Huawei insider told our reporter that starting from 2015, Huawei's consumer business will heavily deploy in more than a dozen overseas countries, the proportion of overseas revenue will increase to 60%, and the proportion of high-end models will increase to 30% of the total models.
But in reality, both camps are currently looking for a balance.
"Samsung's decline actually started in 2013, and it was cut in half in 2014. From the first quarter of this year, it has gradually entered a stalemate." Wang Jiping said that according to the expected data for the second quarter, Samsung's global sales have only declined by 4%, which is not a big slowdown. The market is relatively stable. He believes that this feature will also be reflected in other domestic brands of mobile phones.
"Including Xiaomi's future trend will also slow down, and everyone agrees with this trend. This is because as the market changes and adjustments are almost complete, everyone may return to the same starting line and start a new competition. Both international brands and domestic brands have their own advantages here." Wang Jiping said that the new competitive landscape depends on two aspects, one is real innovation ability, and the other is the overall operating model.
But Wang Yanhui is more optimistic about the performance of domestic mobile phone manufacturers.
An unconfirmed news is that Samsung's only new product in the second half of the year is the Note5. Wang Yanhui said that the biggest innovation of this phone is that it has a dual-curved screen like the S6edge, but it is difficult to attract more consumers' attention. "Mobile phones are becoming more and more standardized. If Samsung cannot launch a phone with distinctive features, it will be difficult to win back a place in the mobile phone market."
Wang Yanhui said that Huawei's current innovation is basically centered around baseband, while Samsung is still competing in AP processing capabilities, but from a technical perspective, Samsung's baseband technology is far behind Huawei's. Take Skylink as an example, this function allows P8 users to use the local operator's data network in an APP mode and at local rates without inserting the local operator's SIM card.
"Although the innovation in basic technology seems small, it is very unique and difficult for competitors to imitate." Wang Yanhui believes that it is almost impossible for Chinese manufacturers to surpass Samsung and Apple in the global market within three years, but domestic mobile phone manufacturers are already on the right track, strengthening their strengths and reducing their weaknesses, and there will definitely be such opportunities in the future.
As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity. |
