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Seoul: Samsung Electronics unveiled
two mid-tier handsets with a
premium design as it prepared to
deliver a riposte to its low-priced
Chinese rivals and reclaim its title as
the top brand in the world's biggest
smartphone market.
Samsung's smartphone woes began
late last year and persisted through
July-September, with its global
market share down on year for the
third straight quarter and its profit
scraping at a three-year low.
Its struggles were prominent in
China, the world's biggest
smartphone market, where Samsung
was dethroned by local upstart
Xiaomi as the top smartphone maker
in the second quarter. It does not
help that Samsung's lower-end
products are too expensive and not
sufficiently distinctive compared to
those touted by Xiaomi and Lenovo
Group, analysts say.
The Galaxy A3 and A5 are seen by
analysts as Samsung's first counter-
strike. Initially launching in China in
November, they will be Samsung's
first devices to feature fully metallic
bodies and its thinnest smartphones
to date. In size, the A3 and A5 are
comparable to those of the top-of-
the-line Galaxy S5, though of lesser
screen resolution quality.
"I think improving specs on the mid-
tier products by using features like a
full metal body is something that
Samsung needed to do to respond to
the Chinese rivals," said Seoul-based
IBK Asset Management fund manager
Kim Hyun-su, who holds Samsung
shares.
Samsung classified the new phones
as mid-tier, and said they will be
launched in other "select markets",
without disclosing the pricing.
The announcement, combined with
hopes for an earnings recovery and
bigger dividends, pushed Samsung's
shares in Seoul to the highest close
in more than two months. The stock
has gained 10 per cent since
Thursday.
Line-up revamp
Success for the devices remains to be
seen in China and elsewhere as
Samsung's rivals continue to make
strides. In comparison to the A5, for
example, Xiaomi's Mi4 device is
thicker but sports a faster processor
and a higher quality display.
"We'll have to wait and see how well
these phones sell," said Seoul-based
CIMB analyst Lee Do-hoon, adding
that the lack of disclosure on pricing
makes the devices' success harder to
predict.
Samsung is expected to launch more
devices in the near term. The
company on Thursday admitted that
it was too slow to respond to "rapid
shifts in the competitive landscape"
and vowed to deliver new products.
"For our mid to low-end
smartphones we will enhance
product competitiveness by
differentiating our displays and
materials as well as upgrading
camera functionality," Senior Vice
President Kim Hyun-joon told
analysts on Thursday, pledging to
take efforts to keep margins at
double-digit rates going forward.
Such margins may be difficult to
achieve, though. Global smartphone
market growth is increasingly driven
by the low-end segment, making it a
race to the bottom for all but
companies like Apple Inc that can
still command a price premium.
Samsung has vowed to improve price
competitiveness, as well, which will
only further erode the bottom line.
Most analysts do not expect a
meaningful profit recovery for the
firm's smartphone business until
mid-2015 at the earliest, when the
company may start seeing tangible
results from a line-up revamp.
"A line-up change is a costly process,
just like re-doing your home interior
design," said KTB Investment analyst
Jin Sung-hye.
Samsung unveils the full metal unibody Galaxy A5 and Galaxy A3, its slimmest smartphones
