No conversation on Samsung is complete without a mention of its “ostrich attitude”. At least for the past few years, the company seems to have buried its head in the sand, trapped in the delusion that all is well. In response to journalists questioning its declining market share, it offers the findings of German market research firm GfK. GfK data paints a rosy picture—when it comes to end consumer sales, Samsung is number one. However, most market research firms go by shipment data, and on that count, Samsung is ceding ground. A lot of it. But in its effort to keep up appearances, it pushes the GfK line.
But that facade is no longer tenable. Samsung has awoken from its slumber and sweet dreams. Now, the Korean electronics major is finally gearing up to take on the very real threats that have effectively dethroned it. The Chinese smartphone giants like Xiaomi, who have done to Samsung what Samsung once did to Nokia.
Analysts who have tracked Samsung for several years wonder how a company as dynamic as Samsung could not see the storm coming. This was the company that displaced Nokia in 2011-12 from the mobile phone firmament completely. There were other reasons of course, but competition from Samsung was prime among them. A few years later, it was Micromax that rose to challenge Samsung and was subsequently defeated. The point is simple—Samsung has seen and trumped several challengers over the years, but no one has really bested it the way Xiaomi has.
Except for Q2 2018, Samsung’s market share in India has lagged behind Xiaomi’s. The slide began in Q3 2017 itself when Xiaomi—which had just a 6% market share a year prior—reached 22%, a notch below Samsung’s 23%. In the next quarter, Q4 2017, Xiaomi climbed to 25%, the clear market leader. Since then, the trend has largely been the same. According to Counterpoint Research’s latest data, Xiaomi controls the smartphone market with a 27% share, followed by Samsung with 22%.
Its slipping fortunes in the smartphone business reflect in its profit numbers. Samsung India’s net profit fell by 11% for FY18, primarily because of competition from Chinese OEMs. Among its various verticals, smartphones account for the largest in terms of revenues, earning Rs 37,349.7 crore ($5.25 billion) for the company in FY18 out of total revenue of Rs 61,000 crore ($8.6 billion). Globally, too, things have not been looking good for the company. According to a report in the Korea Herald, Koh-Dong-Jin, CEO of Samsung’s smartphone business, said that he felt “sorry about the currently struggling status of Samsung’s smartphone business” in a corporate message to executives and employees of the company.
In China, the company has been reduced from a market leader to an also-ran, with just 1% market share according to Counterpoint Research’s Q3 2018 report.