Samsung has had a shaky couple of months. Its plunging smartphone profits in early October have the company eyeing different markets such as wearables and other devices for the future internet of things. Of course, Samsung was already designing products for that market — it’s had a smartwatch out for a year, and has been working on smart home appliances, fitness bands, etc. But its significant drop in smartphone sales was surprising, and has the company looking towards a different track of success.
Bloomberg reported on the company’s last quarter filing: Samsung’s operating profit fell to 4.1 trillion won ($3.8 billion) in the three months leading up to September, compared to a whopping 10.2 trillion won it made in the same quarter the previous year. Sales fell about 20%, having lost share in China and India to local rivals like Xiaomi.
Now Samsung says that it will cut its smartphone models by up to a third in 2015. Clearly, the move aims to cut costs on a sector that is losing profit as other companies rise to the top levels of global smartphone sales. Reports note that the company’s head of investor relations Robert Yi told investors in New York that Samsung plans to cut models by 25% to 30%.
While it is too early to tell if these trends in Samsung’s smartphone market losses are a sign that it will dramatically slip from the top smartphone sales slot on a global scale, the company is clearly making moves to ensure that these losses do not impact its gadget market prowess too much. Cutting the numbers of smartphones available and focusing on the internet of things, smart home products, and wearables indicate its acknowledgement of a different-looking future. As China-based Xiaomi, Lenovo and Korea-based LG make further headway towards the top slots, right behind Apple and Samsung, these two heavyweights will need to reexamine their historical smartphone domination.