Galaxy S4 Sales Slump Hits Samsung's Stock Valuation; $12 Billion Down

[dgstorm]

Sometimes we have to report the not-so-exciting news too... apparently what happened to Apple is now happening to Samsung. When Apple's iPhone was on top, they became the darling of the stock investor's world and it rose like a rocket. After Android and Samsung took the crown away, their stock tumbled. Much of that could be attributed to the fact that the iPhone 5 was a bit of a let down. It didn't really offer any large advancements or improvements to the previous gen iPhone 4S, whereas the Samsung Galaxy line was continuously pushing the envelope on features, functions and styling. Because of this and because Android's star was rising taking marketshare away from Apple, investors decided to follow the new guy on the block, Samsung.

Now Samsung is in a similar boat. Apparently, consumers think the same thing about the SGS4 that the did about the iPhone 5. It is an amazing product, but it doesn't differ enough from the SGS3 for owners of the SGS3 to swap into it. Because of this, and because of excellent sales of the HTC One, the new flagship SGS4 from Sammy isn't selling as well as projected. It's still selling phenomenally well, but when it comes to investors opening up their wallets the bar is sometimes set too high. JPMorgan reduced earnings estimates as monthly orders for the S4 were cut by 20-30 percent to 7-8 million from July. This was due to weak demand in Europe and South Korea. In the face of this "disappointment," investor's have dumped some of their shares of Samsung stock, bringing it down by 6.2%. This may not seem like much, but it equates to a $12 Billion dollar reduction in market valuation.

Ironically, the phone is selling faster and in higher numbers than the previous gen Galaxy S3 did, yet because expectations were set too high, it resulted in a stock drop. It's amazing what a large effect the psychology of investors can have on the movement of funds in this global economy.

Source: Reuters

 

[dezymond]

Pretty much knew this was coming.

 

[GAstorino]

Well if they had differenated the phone out the gate and released the 64gb they might have had a different outcome. Releasing a 16 gb with half taken up with bloatware then taking out the ability to transfer to sd card while Iphone has a 64 gb phone made no sense to me. Why not blow the competition out of the water right at the beginning instead of dribs and drabs to see what they do.

 

[johnomaz]

I was excited about the phone when it came out but ya, it isn't much better than my S3. It needed something like having wireless charging built in, not as an option to buy after you spent money on a phone. My wife is leaving Verizon in a couple weeks and she will be going to TMobile. She asked me which phone to buy and I told her to choose between the S4 and HTC One. She's been reading up on both phones and both excite her. She however is coming from a Galaxy nexus so both are big upgrades. She wanted to go and see the S4 so I handed her my S3 and told her its close enough because....it is close enough. She still doesn't know which phone she is going to get but I bet it'll be the HTC One. HTC managed to get that phone to stand apart and put a little bit of 'polish' on its aesthetics while the S4 is the twin of the S3. I mean, at the end of June (lets hope that time table stands), the S3 is going to be getting a lot of the S4's features.

 

[kodiak799]

I think part of it is we are rapidly approaching the point where most people are not going to pay anything for a subsidized phone. $199 on contract? Nope, make that free. Unless you blow me away, my old smartphone is more than capable - why spend $200 for power I don't need, or $200 for basically shiny new plastic?

Figure the old model where people were upgrading every 18-24 months is being stretched to 3 years or more.

 

[dezymond]

I think part of it is we are rapidly approaching the point where most people are not going to pay anything for a subsidized phone. $199 on contract? Nope, make that free. Unless you blow me away, my old smartphone is more than capable - why spend $200 for power I don't need, or $200 for basically shiny new plastic?

Figure the old model where people were upgrading every 18-24 months is being stretched to 3 years or more.

That's part of the reason I'm sure, but you can't deny that the difference, spec wise, between the s3 and s4 isn't very significant. Bigger screen and full HD are probably the most significant upgrades and it's not even completely necessary on a mobile phone.

Fact is that Samsung is taking after Apple. They've done it with the s3 and s4, and from what I can see they're doing the same with the Galaxy Tab lineup as well. I kinda think that hardware has hit a bit of a plateau as well, so new versions of phones aren't as significant of an upgrade as they used to be. It's the reason why I held onto my Nexus so long.

 

[kodiak799]

so new versions of phones aren't as significant of an upgrade as they used to be.

The phones have really never been significant upgrades, with a few exceptions. However, in the early days of Android users WERE desperate for even marginal upgrades in power to get a better experience. I waited 20 months to upgrade the D1 and that last 12 months was painful struggling to squeeze every last ounce of power. I'm now going on 18 months with my Rezound (running vanilla Android) and I have 0 issues and nothing has me remotely interested in upgrading.

Plus, as an unlimited user my next phone will be purchased retail. In 6-12 months maybe I'll pick-up a used phone on EBAY, unless we get something truly groundbreaking that can dual-boot Windows. Unfortunately, such a phone is a ways off because of cost constraints (we are talking 4gigs of ram and something like the Exynos octacore with 100+ gigs of storage all-in).

In short, it's not the marginal spec improvements driving sluggish sales, it's that if you have an S3 or some other high-end phone bought in the last year there's really no NEED to upgrade. The lack of NEEDING to upgrade is the dynamic that has changed.

 

[TayDee]

This was bound to happen, and by no way should be disappointing news. The S3 is a perfectly fine device, and that's all people want. Hell, I still have a Droid Razr, horrible battery and all. Early Android phones were pretty crappy, so people would jump when they had the opportunity to go out and get a better phone. The S3 is still a great phone, so why should they go out and replace it already? When my contract is up, I will be buying the S4, unless Motorola can surprise me.

 

[combatmedic870]

cant wait till vzw gets the htc one...

 

[pego99]

I love the s4 with VERIZON came from moto razr MAXX. The s4 is so much better than the MAXX was. A truly amazing phone. I paid full retail.

Sent from my SCH-I545 using Tapatalk 2

 

[xeene]

haven't seen any innovative technologies in smartphones since motorola released 3k+ batteries in small form factor.

waiting for next BIG thing, s4 and htc one aren't it.

 

[kodiak799]

waiting for next BIG thing, s4 and htc one aren't it.

The octa-core Eoxynos big-little tech is a fairly big deal, however it's really marginal. Dual-core is plenty of power for most people who don't do a lot of gaming. Otherwise, the display continues to be the big battery drain and from my perspective something like the Eoxynos is a waste of money. I'd much rather that money go to additional storage and better cameras.

Same thing with 1080p screens. For the vast majority of users, there is little (if any) added value going from a 720p to a 1080p screen.

The other giant problem, of course, is the UI that attempts to be all things to all people. Don't get me wrong, they all have some useful features and widgets (most of which can be replicated with various apps from the Play store). But there are many more features you don't need, and no way to remove that bloat effectively as it tends to be an all-or-nothing.