Samsung's mobile division is in trouble. Consumer interest in the company's newest smartphones is falling hard and fast, and with it, profits are declining precipitously. This past October, Samsung divulged that profits from their mobile division plummeted by 74% year over year. Company-wide, profits fell by 60%.
With that backdrop, it's perhaps not surprising that to read new reports relaying that there are calls for a leadership shakeup within Samsung's mobile division.
According to a recent report in the Wall Street Journal, current Samsung Mobile chief J.K. Shin may be shuffled out and replaced with B.K. Yoon, who currently oversees Samsung's appliance and TV unit.
If Mr. Yoon, 61, is given the nod to take over the mobile division, he could be well-positioned to help Samsung compete in the so-called connected home-a hot corner of tech that aims to link home appliances to the Internet. Mr. Yoon has been one of the main proponents of the company's push in this direction, and signed off on Samsung's acquisition earlier this year of U.S. connected-home startup SmartThings.
The decision isn't final, these people say, and Mr. Yoon's takeover of the mobile division, while expected by many within the company, isn't a done deal.
Samsung currently finds itself in a precarious position. They're getting crushed at the high-end by Apple and on the low-end by more affordable handsets. Additionally, despite their best efforts, the company has failed to come out with a killer feature to effectively lure in iPhone owners. What's more, with Apple's new iPhone models both sporting giant screens, Samsung, in one fell swoop, lost its more important longstanding differentiating feature.
Adding to Samsung's woes, the Journal writes that the company manufactured 20% more Galaxy S5 units than they did S4 units. But with demand for the S5 failing to meet expectations, inventory began to pile up quickly. This, in turn, prompted Samsung to spend even more money on advertising in order to boost demand. So far, that solution doesn't appear to be working.
In all, Samsung sold about 40% fewer Galaxy S5 smartphones than expected, with about 12 million units sold to consumers in the first three months since April compared with about 16 million units for the preceding flagship phone, the Galaxy S4, according to people familiar with the matter. Only in one major market did Samsung sell more Galaxy S5 smartphones than it did the S4: the U.S., Samsung's biggest market, one of these people said.
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