Samsung slows down: Market forecast woes

Samsung has, over the last little while, definitely become one of the leaders when it comes to smartphones, posting record after record. It has even gotten to the point where in some areas, the Galaxy brand is almost synynomous for telephone. However, some speculation as of late has revealed that Samsung might be in store for a slowdown on the global market and might be snapped back to reality.



"Samsung Stock collapses" was the headling over at heise.de, noting the global price drop to the South Korean companies shares over the last few days. In South Korea, the shares have fallen by about 6 percent, on the Frankfurt stock exchange, they've fallen as much as 8 percent. As the website noted: "The [loss of] market capitalization was therefore some 12 billion U.S. dollars."
Galaxy S4 Issues

Some might be skeptical when placing some of the blame of the recent price drop squarely onto the Galaxy S4. I mean, just after having celebrated the ten millionth S4 sale since it's launch and with market observers indicating that it's not completely unreasonable to expect 80 million units to be sold it would be hard to believe that the flagship device would be causing any issues for the company. However, analysst from JPMorgan have downgraded expectations after a slower start to the second quarter of 2013.

However, the opinion of just JPMorgan isn’t the sole deciding factor behind the stocks downward shift. Experts from South Korea have also recently put Samsung underneath the magnifying glass. "It's a general consensus that the profitability of Samsung's mobile business will weaken," Young Park, with Woori Securities, noted in a recent interview with the BBC. And while profitability behind their devices was another cause for concern, the market of low-cost competition, mainly stemming from China, is another driving force. Chinese companies have start to push around more clout in the smartphone market as they make more established brands at a cheaper price, especially in the entry-level and mid-range segments. Samsung, as of late, has been excelling in the high-end segment, but has fallen behind in the other two.

Ongoing struggle versus Apple

As per usual, Apple was another factor. The WWDC will be happening in San Francisco on Monday and is Apple’s most important event of the year. As with every year, the announcement of new hardware (iMac and Macbook Pros anyone?) as well as the latest update to iOS 7 are expected to be announced.

However, there are some other rumors circulating around that Apple will reveal a new repurchase model for used iPhones that will encourage users to give up their older generation iPhone in exchange for a discount on a newer model. As well, more rumors of a lower priced iPhone are swirling around; giving rise to speculation that Apple will try to break into the mid-range smartphone market as well. And so, while the press for Apple soars on rumors of new devices and whatnot, the forecasts for competitor Samsung continue to swirl around the drain.
samsung gaktie kursIt may be just a matter of perspective: Samsung stock price over the last five days (left) and last 3 years (right) / © Wallstreet-Online, AndroidPIT




By looking at the historic stock price graph for Samsung, one can easily dismiss the blip as par for the course. When looking at the 3 year history, Samsun has seen a steady rise, with small ups and downs a normal par for the course as they continue their cyclical release of new products. However, there could be more to the latest drop in price.

Samsung and Apple have become pretty similar over the last few years, despite being considered rivals. The unprecedented success of Samsung following Apple’s triumph over the smartphone industry is definitely something to be proud of, however, they should be aware that other companies are continually vying for the coveted spot at the top of the market. However, as every mountaineer knows: In order to climb to the top, at some points you’ll also need to go back down.