Why do people worry about the future of Samsung smartphones?

Samsung is still the largest supplier of smartphones in the world - but its market outlook is not as promising as its number one spot in the market.

Maybe the above chart will tell you why people worry about the future performance of Samsung smartphones? And why this worry is justified.

Let us look at the green and red bars represent the changes in Samsung's operating profit:

1. From 2011 Q1 (first quarter) to 2013 Q3, Samsung's operating profit rose all the way. We all know that the quarterly financial data of electronic technology companies will fluctuate periodically. However, Samsung Electronics performed very well on a quarter-to-quarter basis during the period from early 2011 to Q3 2013;

2. The turning point occurred in 2013 Q4. Samsung's operating profit fell for the first time in three years, and the decline is extremely obvious. The subsequent Q1 2014, Samsung failed to rebound, operating profit only a small increase (the right picture of its second, the first three red bars);

3. On July 8, 2014, Samsung Electronics released its 2014 Q2 earnings report. Operating profit was expected to be $ 7.12 billion, down 15.19% sequentially. If the final result is as expected, Samsung's operating profit "red alert" will continue to increase.

The fourth quarter of 2013, Samsung Electronics became the turning point. The Samsung mobile phone business, which accounted for more than 70% of Samsung's performance, played an important role in this downturn.

Let's look at the blue curve, represented by the Samsung smartphone global market share changes:

1. The second quarter of 2009, Samsung smartphone market share of only 3%. In the following 13 quarters, with the help of the Android system and the global marketing strategy, Samsung surged ahead of the smart phone market and finally reached a historical high of 32.2% (Q2 2012).

2. However, after the second quarter of 2012, the global share of Samsung smartphones was in a period of stagnant growth. After eight quarters always hovering around 30%, or even fell to 28.8% once;

3.Android's performance in the global market is still strong, and gradually squeeze the space for other systems such as iOS - Samsung's stagnant share growth is mainly its own problems.

Therefore, the second quarter of 2012, Samsung mobile phone has become another turning point. So the rest of the interesting question is:

Why Samsung Electronics operating profit turning point, will be later than the market share turning point for up to a year and a half?

There may be a market inertia. Although the share of Samsung smartphones stopped growing in Q2 2012, the high-end mobile phone products Samsung has introduced and its global market presence have helped them to continue to have enough profit growth opportunities.

However, with the disappearance of this market inertia, Samsung's performance finally fell in Q4 2013.

As consumer spending in the global smartphone market shifts to the low-end, it has become increasingly difficult to maintain the profit margins of high-end handsets. Therefore, even if Samsung is able to increase its market share subsequently, it will not be easy to find a new impetus for the growth of operating profit. (Current Analyst: Wang Guan)