In a bid to combat falling profits, Samsung has announced that it will reduce the number of smartphone models it will sell in 2015. That number will be anywhere between 25 and 30 percent, according to head of investor relations Robert Yi.
Samsung will also be looking to get back to a "double-digit percentage margin" in 2015:
After maintaining smartphone operating-profit margins above 15% for 10 consecutive quarters, Samsung's margins from its mobile and information technology business were squeezed to just 7% in the third quarter ended September—the lowest level since the end of 2008, before it launched its first Galaxy smartphone. Acknowledging the slide in margins, Samsung executives said during an earnings call last month that its new goal is to maintain a sustainable double-digit percentage margin starting in the new year. They reiterated that pledge during this week's investor day meeting.
The models that will be discontinued have not yet been disclosed, but Samsung is said to be focusing its attention on the mid- and entry-level segments. To do so effectively, an executive mentioned that Samsung will "increase the number of components shared across mid- to low-end models, so that we can further leverage economies of scale."
The South Korean manufacturer will also increase its focus in China, where Xiaomi overtook Samsung to become the number one smartphone manufacturer in the country earlier this year. Samsung has already started targeting a younger audience with the launch of the Galaxy A3 and Galaxy A5, its first full-metal unibody devices.
Can Samsung turn things around by streamlining its smartphone efforts?
Source: Wall Street Journal
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