Earlier this month, Samsung warned investors not to get their hopes up. For the September quarter, Samsung indicated that profits were likely to be 60% lower year over year. True to form, Samsung earlier this week released its earnings report and the results were as grave as the company anticipated.
Samsung's mobile business unit was particularly hit hard, with profits there falling by a whopping 74% year over year. While Samsung at one point in time was the poster child for any smartphone not manufactured by Apple, the Korean tech giant in recent years has found it more challenging than ever to compete with increased competition from Android devices and the steady rise in popularity of Apple's iPhone. Indeed, Samsung attributes the drop-off in mobile profits to increased marketing costs and tougher competition.
The fourth consecutive quarterly drop in operating profit underscores the continued pressures facing smartphone king Samsung, which has been hit hard by saturation in the high-end market and intensifying pressure on the low end. The tech conglomerate said earlier this month it believes "new smartphone lineups featuring new materials and innovative designs, as well as a series of new mid- to low-end smartphones with strong competitive positioning on both hardware specifications and price," can help boost its results. But for Samsung, things may get worse before they get better.
Apple's iPhone, on the other hand, continues to thrive in the face of detractors who, for years now, have been quick to say that the iPhone has peaked. During Apple's September quarter, the company sold an impressive 39.2 million iPhone units. Year over year, sales increased by 16% while revenue from the iPhone increased by 21%.
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