Samsung decides to trim its product range

By Jay Jay

In a move that shows that Samsung have been stung by the recent plateauing of interest in their smartphone offerings, Robert Yi, Senior Vice President, Samsung Electronics stated that the company will trim down its mobile inventory by 25% to 30% by 2015.

With numbers that will make your mind boggle, Samsung are the global leader in terms of shipping volumes and product lines and boast 171 phone types, of which 56 were launched in 2014. Add a further 27 new tablets that were released and you have the perfect questions for a tech themed pub quiz.

Highlighting the need to achieve economies of scale, Yi stressed on phasing out of less popular models and investing more on the popular ones. Even though this would lead to lesser sales volume, it would be the right direction for the company to maintain profit margins.

According to the Wall Street Journal, Samsung had maintained 15% profit for ten consecutive quarters until the third quarter of 2014 when it reported 49% drop in profits. This coincided with the increasing popularity of the iPhone 6 models as well as stiff competition from Chinese manufacturers Huawei and Xiaomi in the budget phones category.

In terms of its sheer numbers at present, a drop of 30% may not be enough to sustain 15% profitability unless the company sticks to its new found philosophy in the long run and further trims up its inventory.

The announcement comes at a time when Samsung reportedly is planning to build a new manufacturing centre in Vietnam where labour costs are lower than in China.

Written by Mobile Choice
Mobile Choice

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