Apple Inc. (NASDAQ:AAPL)’s latest releases, the iPhone 6 and iPhone 6 Plus, puts it in direct competition with large screened smartphone manufacturer Samsung Electronics Co Ltd. Samsung’s third quarter result for this financial year is expected to be released later this week. Analysts have been slashing profit margins on a daily basis, with operating profit expected to fall nearly 50% and sales by 15%. At this juncture, Shery Ahn from Bloomberg discussed the company’s lackluster performance in consecutive quarters in the channel’s “First Up.”
Ahn said that Samsung Electronics Co Ltd (KRX:005930)’s fall from grace could be considered to be a result of growing competition from Apple Inc. (NASDAQ:AAPL) and other Chinese manufacturers like Xiaomi.
“Those golden days [of Samsung smartphone sales] seem to be over now that cheaper arrivals from China are taking over the market,” she explained. She noted that Xiaomi, in particular, has been doing extremely well in overseas markets.
China mobile’s move to cut its subsidy of $2 billion for smartphones will also have an adverse effect on Samsung’s sales as this move would push the Galaxy manufacturer to increase the price of some of its devices to two times their current price.
Ahn pointed out that Apple Inc. (NASDAQ:AAPL) has always been considered to cater to the high end market. The iPhone manufacturer has established its hold over this market with its iPhone 6 and iPhone 6 Plus. With its entry into the larger screened phablet arena, the company has set foot on what was previously Samsung Electronics Co Ltd’s realm. “The high end market is still very much controlled by Apple and now that they have these smartphones with bigger screens, those are now starting to be a competition for Samsung which used to have a competitive edge with those bigger screens,” she said. She opined that releasing a blockbuster device along the lines of its Galaxy S5 smartphone is the only way the South Korean company can put itself back on the leader-board.
Let Warren Buffett, David Einhorn, George Soros, and David Tepper WORK FOR YOU. If you want to beat the low cost index funds by an average of 6 percentage points per year look no further than Warren Buffett’s stock picks. That’s the margin Buffett’s stock picks outperformed the market since 2008. In this free report, Insider Monkey’s market beating research team identified 7 stocks Warren Buffett and 12 other billionaires are crazy about. CLICK HERE NOW