Samsung may be spending tens of millions of dollars to put on events for the unveiling of the Galaxy S4, but it hasn't forgotten about making devices targeted at emerging markets. We see a lot of new Samsung devices come through that are targeted at the mid range -- such as the Galaxy S3 Mini -- but the Korean manufacturer is also targeting the hyper low-end of emerging markets such as India and Indonesia. In areas where the landscape until recently has been dominated by feature phones, Samsung has gained considerable market share with devices that cost about $100 unlocked. The Wall Street Journal points out that Samsung's market share in Indonesia has risen from 2-percent in 2010 to over 50-percent last quarter.
While there is still a huge untapped market of feature phone users trying to make the move to smart phones, some are worried that Samsung's race to meet the low-end demands will cut into profits. Analysts calculate Samsung's operating margin on these low-end devices at about 12-percent, or less than half of what it is for high-end devices. It's hard to fault Samsung for trying to grab every piece of the market, however. In many cases these consumers are either buying a cheap phone or no phone at all, so choosing to not offer a low-end device to them is a completely lost sale. And with a company the size of Samsung, there's hardly a fight for resources to push into a new market.
Samsung is likely smart to push into emerging markets, if for no other reason than to get consumers acquainted with their smart phones for future purchases. Building up both market share, but also mind share, is extremely important for the long-term viability of sales in a market. They may be buying just $100 entry-level smart phones today, but in a couple of years there's a good chance that the same group of consumers will be ready for the higher end device -- and Samsung will be waiting there to sell them one.