A new report has emerged online suggesting that Samsung will be ceasing operations of its mobile division within the next five years.
The Korean tech giant is the second player in the global smartphone market, right behind Apple’s iPhone dominance. Its flagship Galaxy S line-up is considered one of the most powerful and premium, in terms of hardware, high range series currently in the industry.
Though, Ben Bajarin, principal analyst at Creative Strategies, published a wild assumption that analyzes the possibility of Samsung shutting down its mobile department in the next five years, due to the negligible profit that it will be potentially delivering.
Bajarin’s claim lies on the “The Innovator’s Dilemma“, a theory that essentially describes a situation where a front-running industry name faces intensive competition from rivals who offer devices with respective features at a lower price range. He also concludes that the survival from such an impending catastrophe is almost implausible.
The notion behind this theory is fundamentally based on world renowned expert in business administration, Clayton Christensen, whose perception of The Innovator’s Dilemma dictates that the establishment of a new type of product from a specific firm, often is accompanied by a death sentence, since other companies will be offering the same results for a more affordable price tag.
The aforementioned concept can be easily related to Samsung’s case, as the sudden surge of relatively new Asian Android phone makers, including Xiaomi, Huawei and OnePlus, have caused severe implications to the company’s performance in the particular region- Europe to a smaller degree as well.
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The firms mentioned above manufacture devices sporting high-end specs and design that are equivalent to Samsung’s respective handsets, classifying them at a price range in between US$300 to US$400, while Samsung sets customers back at least US$600- hence there is a $200 premium in the middle.
In addition to zenith pricing strategies, the socioeconomic status of the wider Asian region does not really compute with them, as consumers’ budget usually varies in the likes of Xiaomi, One Plus and Huawei. In a nutshell, $600 is way too much to speculate on a smartphone in Asia.
With the particular intel at hand, Samsung redirected part of its department’s focus, in order to invest on its home-brewed Tizen OS, which is currently being used in more affordable options that aim towards significant emerging markets, such as India, thus boosting the company’s presence in the specific market region as well.
Most recently -less than a month ago- the Korean phone maker launched the Tizen-powered Z3 smartphone, a handset that promises elegant looks -design is mostly based on the Galaxy S lineup- and a fair spec sheet for 8490 Rupees (roughly $130).