Samsung refines strategy to solidify second place
Published: 26 January, 2009
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After the bloodbath of most handset makers' Q4 results calls last week, the figures for market share are emerging, and reinforce expectations that Samsung will use the downturn to solidify its second position.
Cellphones boosted sales and profits at Samsung, even though weaknesses in memory chips and other areas drove it to its first ever quarterly loss, and the Korean giant achieved its highest ever market share in Q4, at 53m units or 18%. That was nearly half the volume seen at Nokia, which clung to 38.4% share (113.1m units) and is also poised to increase this during 2009, even though the Finn expects a blip in the current period, largely because of the short term aggression of low cost vendors in Asia.
Although Sony Ericsson had snatched third place in the global ratings in Q3, it was only a fraction of a percentage point ahead of Motorola and LG, and in Q4 the situation flip-flopped. LG grabbed third place, shipping 25.7m units for 8.7% share, fairly convincingly ahead of SE, with 24.2m phones sold and 8.2% share. Motorola was consigned far more definitely to fifth place in this quarter, shifting 19m units for 6.4% share. That meant that the big five controlled 80% of the world total of 294.6m phones, according to the estimates of Strategy Analytics.
Samsung has adapted its product mix strategy somewhat in light of further deterioration in the market. It had seemed focused on being aggressively price competitive in the midrange, but will now defocus on this, the most vulnerable segment of the cellphone space, and throw most of its efforts at smartphones and very low cost models - an approach that mirrors Nokia's. It also suggests that Samsung is relying on more than its recent tactic of challenging Nokia on pricing - since Nokia is determined not to sacrifice too much of its precious profit margin - and that may, in turn, imply that the Korean now believes the recession will last beyond 2009, requiring a more creative response than just price wars.
"We'll continue offering low end models in emerging markets, while expanding our portfolio of high end touchscreen phones and smartphones," Samsung said in a statement.
"In the global handset market, the demand will be polarized with high end and low end phones, not mid-tie." The company expects to ship over 200m units in 2009.
In advance of regional data, it seems likely that Samsung, the only company whose handset business improved in Q4, will have extended its US lead over Motorola. It recently promoted its north American head, Dale Sohn, to group executive VP, reflecting the booming position in the US market.
Strategy Analytics revised its forecast for 2009 handset sales to a drop of 9%, in line with Nokia's estimate of a 10% volume fall.
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