Tuesday, 24 September 2013

On Samsung – Strategy, Numbers, Finances And Products

Samsung (1)
On the 11th of September, Apple released its new range of iPhones (the 5S, and the 5C). Most believe that they lost the lucky streak with Steve Jobs, and a lot of the products released since are testimony to that, as they feature simple design/hardware upgrades, instead of the radical developments consumers have grown to expect and line up for. Coupled with the fact that some of the new key software features like iOS maps, and Siri have both failed in large part to deliver to their grandiose promises....

While the iPhone may indeed be the biggest selling smartphone in America, it’s still a sluggish second, worldwide. According to Gartner, during Q2 of 2013, worldwide smartphone sales shot up from 153.77M to 225.36M units. And of this, Samsung accounted for 31.7%, with 71.38M units sold. Apple, however came in second with 14.2% of the global market, selling 31.9M units worldwide, compared against Q1 of 2013, where Samsung touted a 29.7% and Apple an 18.8% share. It’s safe to say that slowly, but assuredly, Samsung has widened the gap, and that Apple’s new iPhones will have a hard time closing it

Let’s address Samsung’s financials
Samsung (1)
Samsung is a truly vast conglomerate. Operations range from electronics to the manufacture of ships, to construction, to insurance (to name a few). And of late, the “Samsung Electronics” division has become the core of its empire, whose biggest systematic advantage lies in diversification, (let’s not forget that they’re the second largest semiconductor manufacturer worldwide).

In its just completed quarter, Samsung’s revenue was up to $47.54B from $40.71B in 2012. Its earnings rose from $29.06 last year, to $41.61. However, strangely, analysts aren’t very pleased with performance. Samsung has begun to invest heavily in R&D, spending well over $3B on five new research centres, in spite of this, the recently released GALAXY S4 (the look-but-don’t-touch phone) has been estimated to have sold under 20M units, grossly falling short of expectations.

A quick word about Samsung’s product lineup
It’s no secret that Apple for the longest time believes that Samsung has grown to its current position of glory by copying a number of its innovations. I remember grinning when Apple was awarded $1B in damages by ruling that Samsung had violated its patents. Regardless, Samsung has continued to release products.
samsung galaxy gear
A week ago, the GALAXY Note 3 “phablet” was released, a confused bridge of phone and tablet, where you need one hand to hold it in an open palm and the other to operate it. It’s quite grotesque. Still unsure how calls are made on it. That, along with the Galaxy Gear, a $299 smart watch.
Samsung has become the first company to release a smart wearable device, amidst speculations of an iWatch, expected in 2014, and for Google to finalise the Glass. The wearable devices market is projected to be worth over $4.6B by the end of the year, so, even if Samsung’s getting affected by low-cost “smart-phones” released by the Chinese, it’ll manage to get a head-start in what could be the next great computing trend.

Samsung stock is selling at $1,325, with a market cap of $195.2B.

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