Samsung’s growth stalls in Q4 2013. And things may get worse this year
Samsung’s growth has been slowing for a while now. Especially in the high end of their smartphone range. And now, it seems, it has stalled.
Today Samsung has announced its preliminary results for Q4 2013, and they are really bad. Profits came in at 8.3 trillion won ($7.8 billion), which is way below 10 trillion won analysts had expected, and is the first decline in more than 2 years.
What’s even worse, is the slowdown in Samsung’s overall sales. They came in at 59 trillion won ($55.2 billion), and were unchanged from the previous quarter. Which is really really bad news, since in consumer electronics the fourth quarter and Holiday Shopping Season – is the time vendors sell way more stuff than in the quarters before. Compared to Q4 2012, Samsung managed to eke out a bit of growth. But only measly 5% – from 56 to 59 trillion Won.
And it will get worse this year.
In Q4 2013 Samsung had Galaxy Note 3 to boost sales numbers. Early December they announced that they have shipped 10 million of them, starting in late September. But those shipments to carriers and wholesale partners seem to have failed to find adequate end customer demand, just as I was afraid of. It will be a very long wait for the next Galaxy Note 3 sales milestone announcement.
With Holiday Shopping season in the West over, and no new high profile handset on the horizon, the only place Samsung may go looking for growth in Q1 – is China. They have their own gift giving season coming up, which usually provides Q1 sales cushion for any electronics vendor who is able to crack the market.
But this year Samsung is facing a much more challenging competitive environment in China too. China Mobile’s iPhone 5S will make things complicated for Sammy at the high end, while local vendors like Huawei, ZTE, Lenovo, Coolpad and Xiaomi will be squeezing them from the bottom with new mid to low-end offerings like Red Rice, Glory 3 and Nubia Z5S.
With competitors now covering all distribution channels and price ranges with viable alternatives, looks like Samsung is in for a very challenging 2014.