It seems for Samsung, the old adage, "when it rains it pours" holds some validity. Looking back, I remember at the end of last year, Samsung was riding high on the fact that their Galaxy S line of phones were dominating the smartphone scene. At that time, they had some huge plans, and made some bold claims. Perhaps that "hubris" is coming back to bite them, and is providing a harsh lesson, or perhaps it isn't really fate or karma, just the dynamic nature of "free enterprise". Regardless, right now, Samsung is being assailed from all sides by a slew of harsh realities, and I thought it would be interesting to dive into the mess and discuss it further.
Let's start with their latest bit of bad news. A recent report from Samsung indicates that their profits are down company-wide by 26%, primarily due to fallen LCD display sales and weak semi-conductor sales. Their only bright spot is that their phone division is still turning a profit, although even that could be hampered, because of the delay of the Galaxy SII to the United States. This comes on the heels of several other harsh events bashing away at the tech-giant. Let's list them all for easy reference in no particular order:
- Reduction of company profits down $1.1 Billion Dollars due to reduced and weak sales in display business and semi-conductor business.
- They can't get their Galaxy S II phones to the Unites States because of tougher negotiations with carriers that are already flooded with dual-core devices.
- Microsoft enforcing Android device patents to the tune of $15 dollars per device sold.
- Multiple injunctions from Apple with the US International Trade Commission trying to block Samsung's Phones and Tablets because Apple believes they are "copying" their designs.
- Multiple Lawsuits from Apple trying to block Samsung's Phones and Tablets because Apple believes they are "copying" their designs.
- Apple (Samsung's biggest customer) may drop them due to all these lawsuit issues.
To put things in perspective, here is a quote from Kim Sung In, a Seoul-based analyst at Kiwoom Securities Co,That's a pretty bleak outlook, and after reading and writing about all these events over the past few months, I wanted to chime in on the subject.“Only the phone business is holding up. Everything else is looking bad. There’s no bright picture for the company looking ahead.”
In the past, I have seen many people with varying perspectives on Samsung. Some people are big fans of the company. I can probably count myself among them. I own/have owned many Samsung products. I currently own a Samsung Home Theater System that has been an amazing product for the last 9 years I have owned it. Further, I also have a Samsung LCD TV that I bought several years ago, and it has held up well too. I have owned a few Samsung products that failed too. I had a 19" LCD monitor that died after the warranty period. Furthermore, I have owned some Samsung "feature" phones, (long before smartphones even existed), that got replaced by other brands for various reasons. Ultimately, my experience with the company has been primarily a good one, and I know other people with the same perspective.
On the other hand, there was a time earlier in the year, when many folks were upset at Samsung for some of the draconian policies with their smartphones, and some instances of poor customer service. This was also around the same time that Samsung was doing really well with their Galaxy S line of phones and portrayed an almost arrogant attitude toward the markets and their customers. I can see how this might have "put off" many consumers toward the company. At any rate, regardless of whether their current situation is deserved or not, it seems to me that it is an unusual occurrence to see a company of Samsung's size and caliber have so many negative events bombarding them from every side.
Ultimately, Samsung is a large enough international corporation that they will probably be able to fight through this onslaught of bad situations and come out just fine. Also, it may give them a better sense of purpose and make them stronger in the long run. Perhaps it will even endear them to their customers again, so they won't lose site of what really keeps them in business. Further, it is even possible that many of these "stumbling blocks" will be turned into "stepping stones". It's possible that Apple and Samsung will come to some sort of agreement and continue their long-running partnership. And, in all likelihood, Samsung will finally get the Galaxy SII phone here to the States and it will generate some much needed profits to help them retool their display and semiconductor divisions.
What do you guys think of what is happening with Samsung? And, what do you think will be the probable outcome in the end? Could this be the beginnings of their downfall, or just a small chapter in their story? How many of you own, and would buy Samsung products in the future? Finally, who has been holding out for the Galaxy SII?
Picture & Fact Source (for Sliding Profits Portion): BGR