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Samsung's mobile phone sales decline

Samsung's mobile phone sales decline

Samsung Galaxy phone 
 There have been some concerns recently over a slowdown in Samsung's growth

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Samsung Electronics has reported a 4% fall in sales at its mobile phone unit.

Revenues in the sector fell to 33.4 trillion won ($32.3bn; £23.3bn) in the January-to-March period.

But the South Korean company said operating profit for its mobile phone unit rose 18% from the previous three months, in part due to "positive impact from adjustments of one-off expenses".

Samsung is the world's biggest mobile phone maker and handsets account for the bulk of the firm's profits.

The figures came as the electronics giant reported a net profit of 7.57 trillion won (£4.4bn; $7.5bn) for the first quarter, up from 7.3 trillion won (£4.2bn; $7bn) in the previous three months.

Maturing market?

“Start Quote

This is further evidence that the global market for smartphones is maturing”
Andrew Milroy Frost & Sullivan
 
The success of its Galaxy range of smartphones has been one of the biggest drivers of Samsung's growth in recent years. 

It helped the company dislodge Nokia as the world's biggest phone maker in 2012.
However, competition in the sector has been increasing, forcing manufacturers to lower their prices and hurting their profitability.

At the same time, demand for smartphones in developed markets - which have been key drivers of growth of the sector so far - has also begun to slow.

"This is further evidence that the global market for smartphones is maturing and as the pace of growth which firms such as Samsung have enjoyed in recent years is slowing," said Andrew Milroy, an analyst with consulting firm Frost & Sullivan.

He added that "the company will have to look at introducing lower cost models in emerging markets to sustain the business."

For its part, Samsung has been looking to tap into the emerging markets by launching low cost handsets there.

However, it has been facing increased competition on that front as well, especially from Chinese firms such as Xiaomi, Huawei and ZTE.

http://www.bbc.com/news/business-27185556
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