Samsung ends 2014 with slumping smartphone sales, mobile profits down 64%

Samsung released its Q4 2014 earnings report today, revealing an entirely expected slump in smartphone sales caused by sharper and cheaper competition around the world.

Here are the highlights (or, more aptly, the lowlights):

• Q4 revenue across the whole company was KRW 52.73 trillion (US$$48.6 billion), which is down 11 percent from the same period a year ago.
• Q4 operating profit was KRW 5.29 trillion (US$4.87 billion), down 36 percent from the same period a year ago.
• Both figures are slightly below Samsung’s earlier expectations for the quarter.
• Samsung’s IM Division, which covers phones and tablets, posted KRW 26.29 trillion (US$24 billion) in revenue, which is down 22 percent from Q4 2013; it also saw KRW 1.96 trillion (US$1.8 billion) in operating profit, plummeting 64 percent from 12 months ago.

Looking further across Samsung’s portfolio:

• Its Device Solutions Division, which makes memory products, saw the strongest growth.
• Its Display Panel segment saw strong sales of LCD screens, “driven by growing demand for larger panels and further growth of the UHD TV market,” the company’s report says.

So, Samsung’s phone sales are going down (though no unit sales figures are provided), and the company is instead bolstered by parts manufacturing for other firms. One ray of hope is that the average selling price of Samsung’s smartphones rose in Q4 due to “high-end smartphones, such as the Galaxy Note 4.” The Note 4 came out in mid-October, giving it plenty of time to impact Samsung’s newest earnings.

What’s going wrong?

Samsung’s slowdown is caused by a number of factors, such as:

• Apple’s larger-screen iPhone 6 and iPhone 6 Plus are eating into Samsung’s high-end phone sales.
• Cheaper yet solid smartphones from brands like Xiaomi and Huawei are eroding Samsung’s mid-range and low-end smartphones.
• Xiaomi looks set to surpass Samsung as China’s smartphone leader in terms of sales.
• In India, homegrown brands like Micromax and Karbonn are beefing up their phones in order to fend off new invaders like Xiaomi and OnePlus, and that’s impacting market leader Samsung and its pricer phones.
• Consumers and gadget reviewers alike have fallen out of love with Samsung’s plastic-based phones and Touchwiz Android skin. Samsung needs a major hardware and software overhaul in 2015.

Samsung’s disappointing results are in stark contrast to Apple’s earnings for the same time period, which the Cupertino firm revealed yesterday. Apple made more profit in Q4 (US$18 billion) than any other company in history.

See: Xiaomi sold over 61 million smartphones in 2014