Samsung’s 10 million Galaxy Note 3s sold is another sign of a very challenging 2014 coming up
Samsung shipped 10 million Galaxy Note 3 phablets in about two months, according to their official blog. Which is an impressive number, and trounces already great sales of its predecessor – Galaxy Note 2.
There’s no question about it, after inventing the category 2 years ago, Samsung still rules the phablets with nobody else able to come close.
On the other hand, there are some worrying signs that Galaxy Note 3 will follow the pattern of Galaxy S4 flagship. Which, after initial sales surge, headed for a serious slowdown.
The first two months after launch looked great for SGS4, too. Samsung managed to ship 20 million flagships between late April and July 2013. But if you look at the details, the sales slowdown was already apparent back then. While it took Sammy 26 days to ship the first 10 million units of SGS4, the second 10 million batch required 40 days, or 2 weeks longer. And we are talking shipments to carrier partners and wholesalers here, not the end user sales.
Usually this distinction between end user sales and partner shipments does not matter much. Everybody, including Apple, reports shipments – not the end sales. Except in cases like these, when you have a really hot handset coming up, and every local carrier and reseller is begging for its share of new devices, and as many as early as possible. When forecasted end user demand doesn’t materialize, the OEM is in for some serious order revisions in the month #3 and onwards.
This is exactly what happened to Samsung Galaxy S4. Rumors about flagship component order reductions started showing up in late June, and were confirmed in October. By the time Samsung was able to report 40 million Galaxy S4s shipped, it was selling them at a rate of 5-6 million units a month. Still a very impressive number, but nowhere near the original internal projections. And, what’s worse, less than Galaxy S III at the same time a year before.
Samsung Galaxy Note 3 is on the same trajectory. It took them about 34 days to report the first 5 million units shipped, and now its about 41 days for the second 5 million batch. The slowdown is not nearly as serious as with Galaxy S4, but its there nonetheless. And we are again talking about the shipments to carriers and wholesalers. At the height of Holiday Shopping Season, with most of pre-Christmas orders already in.
Samsung has put on a brave face during investor and analyst day in November, leaking the plans to sell 360 million smartphones and 100 million tablets during 2014. But those plans have already been revised down to 330 million smartphones, with supply chain hinting of no more than 70 million Samsung slates in 2014.
Mobile division has generated some amazing growth numbers during the last few years, and is now responsible for more than half of all Samsung’s profits and revenues. But the easy growth times are over, and this business is now headed for some seriously challenging times. We are probably in for another record quarter of sales for Samsung this year – it is a Holiday Season, after all. There’s also a slim possibility of good news in Q1 if they are able to capitalize on 4G launch and Gift Giving Season in China early next year. But with the iPhone on China Mobile, even that will be hard to do, and for Q2-Q4 2014 – all bets are off.
The next Samsung earnings conference call in late January, when they will provide guidance for the next year, and analysts will be able to ask some pointed questions about future margins, ASPs and sell-through of the new products like Galaxy Gear, should be very interesting.