Samsung's smartphone market share slips to 31% as profits, revenues slow

Samsung reported flagging profits and smartphone market share in the first quarter of this year, but the company promised improvements throughout the rest of 2014 on the strength of its Galaxy S5 smartphone, interest in the World Cup soccer match and improvements in its display panel and home appliances businesses.

Moreover, Samsung promised increased focus on wearables, business sales and other areas. "Samsung is also poised to expand its new product categories such as wearable devices, strengthen its B2B business footprint through Knox and in the education market and make advancements in its ecosystem for device connectivity," the company said in a press release.

As it forecast earlier this month, Samsung reported a dip in its operating profit and relatively flat sales, year over year. Samsung's operating profit fell 3.3 percent year over year to $8.2 billion. Profit in the company's mobile division fell around 1.2 percent during the same period. And Samsung said its revenue slipped 9 percent quarter-on-quarter "due to weaker seasonality."

According to research firm Strategy Analytics, Samsung shipped 89 million smartphones worldwide in the quarter, good for a 31 percent share of the smartphone market in the first quarter. That figure is down slightly from the 32 percent Samsung commanded in the year-ago quarter.

"This was Samsung's first annual market share loss in the smartphone category since Q4 2009," Strategy Analytics noted. "Samsung continues to face tough competition from Apple (NASDAQ: AAPL) at the higher-end of the smartphone market and from Chinese brands like Huawei at the lower-end."

Samsung's quarter did not include sales of the company's new Galaxy S5 flagship Android phone, which went on sale just as the quarter was ending. Looking ahead to the coming quarter, Samsung predicted modest increases in its smartphone performance: "For the next quarter, smartphone and tablet demand is expected to slightly increase under continued weak seasonality, but Samsung will maintain solid earnings momentum through full-fledged global sales of Galaxy S5," Samsung said. "Based on its differentiated features, and initial response from the market, Samsung expects Galaxy S5 to surpass sales of Galaxy S4."

Overall, Strategy Analytics said the smartphone market grew 33 percent in the first quarter to 285 million units on to "healthy demand" in Asia but sluggish shipments across North America "due to changes in the operator subsidy mix." Wireless carriers in the United States are moving away from providing subsidies on smartphones with two-year service contracts in favor of charging subscribers for the full cost of a device and financing the expense through monthly installments.

As for Samsung's rivals, Strategy Analytics said Apple's share of the smartphone market declined from 17.5 percent in the first quarter of last year to 15.3 percent in the first quarter of this year--Apple is the world's second largest smartphone vendor behind Samsung. In third place, Huawei's share of the market remained the same at 4.7 percent, but Lenovo's share of the market grew from 3.9 percent in the year-ago quarter to 4.7 percent in the most recent quarter; Lenovo is on track to acquire Google's (NASDAQ: GOOG) Motorola smartphone business. Lenovo is the world's fourth largest smartphone vendor.

For more:
- see this Samsung release
- see this TNW article
- see this CNET article
- see this Reuters article
- see this Strategy Analytics release

Special Report: Wireless in the first quarter of 2014

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