Samsung plans price cut for Galaxy S6, S6 Edge
Warning that it faced a difficult market environment, the smartphone maker announces that it's "adjusting" the price of its flagship handsets.
It seems that demand for the Galaxy S6 is not quite what Samsung expected after all.
In announcing its most recent quarterly earnings Wednesday, the Korean electronics giant warned that its handset division would likely face a difficult market environment and said it would be "adjusting" the price of its flagship Galaxy S6 and S6 Edge to "maintain" its sales momentum. The company also said it would release new high-end smartphones as well as middle- and low-end models.
The company declined to describe what the adjustment entails, but a person familiar with the company's plans said a price cut is planned for the smartphones. The news came as the company announced that its second-quarter sales in its IT and mobile division fell 8.4 percent, to 26.06 trillion won ($22 billion), with mobile in particular dropping 7.3 percent, to 25.5 trillion won.
Once the world's largest smartphone maker, Samsung has seen its fortunes dwindle as consumers opt for devices from its rivals, such as Apple. Formerly accounting for two-thirds of Samsung's operating profit, smartphone shipments have been providing a smaller part of company's profit in recent quarters, squeezed in emerging markets by low-cost handset vendors such as Xiaomi and Huawei.
The move comes as the company saw a decline in both smartphone sales and market share during the first quarter of 2015, research firm Gartner reported in May. The Korean electronics giant sold 81.1 million smartphones in the quarter, 4.4 million less than the same period a year ago. The company's market share stood at 24.2 percent, down from 30.4 percent in the first quarter of 2014.
Samsung doesn't break out how many devices it has sold, but for the second quarter, analysts estimate the company shipped 71 million to 76 million smartphones during the quarter, according to The Wall Street Journal.
After a lackluster reception for the previous flagship model, the Galaxy S5, Samsung had pinned its hopes for a turnaround in the coming quarters on sales of the Galaxy S6 and S6 Edge, which were released to critical acclaim in April.
Indeed, Samsung mobile chief JK Shin predicted that demand for its Galaxy S6 lineup would be "much higher" than initially planned for. The company also warned that production of its Galaxy S6 Edge was expected to be hobbled due to both its expected popularity and to difficulties in crafting its screen.
The two devices feature metal casings instead of Samsung's normal plastic, and the Edge also includes a screen that curves around the sides of the device. Samsung opted to use its own processors in the devices instead of purchasing chips from suppliers, which also should benefit its financial results in coming months.