Flashbacks and Forecasts: Samsung in 2016

by: Kris CarlonJanuary 18, 2016
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2015 was a tumultuous year for many Android manufacturers and 2016 will be make-or-break for some, as the smartphone market plateaus and competition arrives in increasingly varied forms. With that in mind, we wanted to take a look at the year that was for our favorite Android OEMs, to highlight the highs and lows and to make some predictions for the year ahead.

First off the bat is the world’s largest Android smartphone maker, Samsung.

Samsung in 2015

Despite traditionally being seen as a follower, 2015 was the year that Samsung came closest to being considered an innovator since the introduction of the Note series back in 2011. During 2015, Samsung introduced the first Edge variants to the market and completely redesigned the outward appearance of its flagship S Series.

2015 was the year that Samsung came closest to being considered an innovator since the introduction of the Note series back in 2011.

The Galaxy Note 5 followed this design lead later in the year and hints of it could be found in the mid-range Galaxy A and entry-level Galaxy J series as well. TouchWiz was rebuilt from the ground up and the Exynos 7420 was the chipset to beat. In some ways, 2015 was a year of rebirth for the South Korean manufacturer.

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The “new” Samsung

This product “rebirth” was also mirrored in the company’s executive ranks. With Samsung Chairman Lee Kun Hee hospitalized since May 2014, the company, under the leadership of his only son, Lee Jae Yong, began showing signs of a power-shift to a younger generation.

The biggest Samsung staffing news of 2015 was the replacement of long-time Samsung Mobile chief J. K. Shin with Koh Dong Jin, former head of Samsung Pay and Knox and overseer of the Galaxy S6 and Galaxy Note 5.

Samsung is looking more toward enterprise, software and component sales as its primary revenue drivers in future, moving away from a concentration on hardware.

Koh’s background in Knox and Samsung Pay reflect a general sentiment that Samsung is looking more toward enterprise, software and component sales as its primary revenue drivers in the future, moving away from a concentration on hardware. This change in focus can be seen in Samsung’s push forward with its virtual reality headset Gear VR and the appearance of the Gear S2, a very polished and impressive wearable running Tizen OS.

Samsung admitted as much in its Q3, 2015 earnings statement: “In 2016, the growth rate for the smartphone market is expected to slow down continuously….the company seeks to facilitate the global expansion of Samsung Pay, and reinforce the competitiveness of wearable devices to actively respond to market needs.”

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Reliance on component sales

But for the time being, component sales are making up for the vast sums of money being lost by the mobile division. “The profit from semiconductors and display panels offset the weak performances in smartphones and consumer electronics in 2015,” said Greg Noh, analyst at HMC Investment Securities.

Noh was speaking following the release of Samsung’s Q4, 2015 earnings estimates (the audited figures will be out later this month). Despite declining smartphone profits, mostly brought about by lowered flagship prices and increased marketing expenses, Samsung is expected to see a 15% increase in YoY operating profit compared to Q4, 2014. You may recall that Samsung’s Q3, 2015 earnings saw the first operating profit growth in seven quarters. So back-to-back-growth is a good sign.

SAMSUNG REVIEWS:

A “difficult business environment”

But the situation is not exactly rosy. Cast your mind back to the end of 2014, when Samsung announced it would cut its smartphone product lineup by as much as 30%. Even though the Galaxy S6 models and Note 5 have sold well, remember that the first S6 variants underwent a mid-year “price revision” due to a poor H1, and in H2, Samsung offered a $150 rebate to anyone that bought an S6 variant or Note 5 to help bolster sales.

Samsung is expecting a “difficult business environment” for its mobile division for the foreseeable future.

In Q3, 2015 Samsung said it saw a significant increase in sales of its flagships, but the decrease in price meant declining YoY mobile profits. Fortunately, Samsung shipped more mid-tier devices to generate the cash it made, but even then, Samsung was expecting a “difficult business environment” for its mobile division for the foreseeable future.

It should also be remembered that Samsung’s original fourth quarter predictions for 2015 were $6.8 billion, a figure that was later revised to $6.4 billion and is now being estimated between $6.0-6.2 billion. The thing is, it’s not like Samsung is doing anything particularly wrong; quite the opposite in fact.

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Weakening market and aggressive competition

To its credit, Samsung has scaled back and clarified its core mobile product portfolio, expanded comfortably into valuable categories like VR and wearables, refined and sped up its interface, rolled out Samsung Pay and expanded Knox. Furthermore, Samsung is reportedly producing flexible OLED displays for the iPhone 7, and still has its internal memory and semiconductor businesses to rely on for cashflow.

To its credit, Samsung has scaled back and clarified its core mobile product portfolio, expanded comfortably into valuable categories like VR and wearables, refined and sped up its interface, rolled out Samsung Pay and expanded Knox.

The problem comes more from a weakening smartphone market and increased threats from other OEMs. Companies like Xiaomi are weakening Samsung’s position on the low end of the spectrum and Apple’s larger-screened iPhones have chewed away even further at the high end. Samsung is making some very good moves but they aren’t enough to keep aggressive competitors at bay or counterbalance a plateauing mobile market.

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As Samsung CEO, Kwon Oh-hyun, recently said at a company gathering to celebrate the new year, Samsung is expecting slow growth to continue in 2016, sparking a frenzy of “tough times ahead” stories. While these stories focused on Samsung, the company is not alone in facing the slowdown of the mobile telecommunications market: Xiaomi is under-performing, Sony and HTC are circling the drain, LG isn’t going anywhere fast, and Motorola is going through an identity crisis.

So what does the year ahead hold for Samsung? The problem is that there are too many competent competitors in the Android space and Apple has seen a recent resurgence in popularity following the launch of the iPhone 6 and iPhone 6 Plus. With Apple gobbling up all the profits and the “units shipped” mantle being nibbled at constantly from the other end of the spectrum, Samsung has some tough calls to make.

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Samsung in 2016

For sure Samsung will look to expand its component sales in 2016, but analysts are predicting “a drop in the momentum for demand in all finished goods in 2016, and that will lead to a decrease in earnings in the parts sector”. So while Samsung may suffer on both the component market and the smartphone market, at least it has a component market; much of Samsung’s competition have no other departments on which to fall back on.

Mobile SoCSee also: Snapdragon 820 vs Exynos 8890: the 2016 mobile SoC battle begins29

Everything depends on the Galaxy S7

Against this background it is obvious why Samsung is reportedly bringing back microSD expansion to its flagship Galaxy S7, due to be announced at the end of next month. Samsung needs a win, and resurrecting a feature that has been a key factor of success in the past isn’t a bad idea. Not to mention the current UHS-II standard for microSD actually has read-write speeds faster than those in the Galaxy S6’s flash storage.

Samsung will surely do something about its RAM management issues. If recent apps still reload from scratch on the Galaxy S7 then Samsung will deserve the backlash.

The response to the Galaxy S6 design was evidently good enough for Samsung to concentrate on other things. The Exynos 8890 and Snapdragon 820 will bring next-generation performance to the S7 and with 4 GB of RAM in the S7, Samsung will surely do something about its RAM management issues. If recent apps still reload from scratch on the Galaxy S7 then Samsung will deserve the backlash.

Fortunately, the rumor mill also has larger batteries in the new S7 variants, as well as water-resistance. The Galaxy S7 is also likely to appear with a version of Force Touch or 3D Touch, possibly based on Synaptics’ ClearForce technology.

With cameras in 2015 from Huawei, LG and Motorola making significant ground on the previously untouchable Samsung, smartphone photography is going to be one of the big battlegrounds of 2016. Samsung is rumored to be doing all kinds of things, from using a sensor with one micron pixels to including a version of Apple’s Live Photos and a 20 MP camera.

samsung galaxy s7 first look aa-16See also: Samsung Galaxy S7 rumor roundup: release date, price, specs, features30

Samsung Pay press

Wearables, Tizen and Samsung Pay

Wearables will be bigger this year than ever before and Samsung needs to make its mark in that space. The Gear S2 and the mobile Tizen platform on which it runs are great, but the lack of apps is the Gear S2’s Achilles’ Heel. Addressing this and delivering an equally compelling Android Wear offering are critical if Samsung is going to dominate the wearable space this year.

Expect to see more announcements from Samsung this year regarding enterprise, VR and Samsung Pay, as the company looks to increase its business dealings on the software front. The hardware line up might undergo even more refinement, although rumors of three or four Galaxy S7 variants doesn’t make it look that way. The days of throwing countless devices at the wall to see which ones stick is over for Samsung. These days every move counts, and every product release needs to be solid.

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The forecast

2016 will see Samsung gradually shift from being seen primarily as a hardware company to a software and component company. Internal changes at the executive level will likely continue, hopefully injecting some much needed fresh ideas into the upper echelons and introducing some fresh approaches to regaining lost ground. Samsung’s position as a “maker of everything” certainly insulates its future much better than many smaller companies that are facing the same grim mobile reality.

Samsung’s position as a “maker of everything” certainly insulates its future much better than many smaller companies that are facing the same grim mobile reality.

Is Samsung’s mobile heyday over? Yes. But from the ashes a different company might yet rise to a version of its former glory. The bubble certainly hasn’t burst yet, but Samsung Mobile, like other, much smaller and less well-financed companies, needs to look beyond the scope of traditional smartphones and tablets for the next big thing. It might be virtual reality, it might be wearables, but whatever it is, it needs to be identified and seized upon quickly to counteract a worrying realization: that the market is already saturated.

Also check out – Open letter to the manufacturers: what we want in 2016

  • Diego

    Samsung, this is what you can do to get me back.
    1. Ship motorola like software on your phones.
    2. Bring replaceable battery to the note line of phones.
    3. Stop trying to be an iPhone.
    People buy the iPhone because of brand awareness, which you don’t have.
    Just ask someone whats a galaxy s6.
    4. remove the confusing lineup of phones.
    5. Make a world phone.
    I mean, you have like a doesn’t different variants of the same phone.
    6. faster software updates.
    HTC can do it with the a9, or thats what I know.
    TL;DR,
    Until you do those things, I’m going with LG.

    • V-Phuc

      Good suggestions. My comments are as following, “So Samsung first started saying microSD can’t be supported by bla bla bla.” A bunch of people bough this lame excuse. Not me. Guess what, they may very well bring it back with the S7 (not with the Edge). Now to the non-removable battery. Again bla bla bla excuse from Samsung. What if their sales of S7 are down again? Would they bring back this feature? After all, a lot of loyal Samsung fans are NOT happy with these 2 features vanishing. Stop buying Samsung for another year, and we may see Samsung back with what’s supposed to be a good Android phone, instead of a iPhone wannabe. BTW, not a lot of iSheep buyers bought this wannabe idea so wrong move, Sammy.

      • Diego

        Yeah.
        You can see they were trying to get isheep with their get a galaxy s6 for 30 days.

    • saksham

      lol samsung has a huge brand recognition here in india pretty sure its in europe and usa as well

      • Luka Bulatović

        I can confirm for (most of) Europe. Nexus on the other hand is a different story…

  • coldspring22 .

    If iphone sales decline in 2016 (as many top AAPL analysts are predicting), then who is chewing Samsung flagship phone sales? More to the point, who is chewing iphone sales? Androidauthority might want to write a story about how Apple is going to see it’s iphone gold goose erode.

    • Diego

      LMAO.
      And you believe the analysts?
      For how many times have they been saying this?

    • Diego

      iPhone sales are going down based on what?

  • Zan

    Never again Samsung! Slow updates and tons of bloat. My once mighty Note 3 was turned into garbage with 8 month late patches, bugs, and bad radios

    • Sebastian Bartlett

      Yawn, maybe use a 2015 flagship, software changes

    • Fifth313ment

      LOL, this article failed to mention that Samsung had one of it’s worst years EVER this year! Oh an that has to do with continuing Android competition and not intentionally alienating 50% of your base by removing microSD cards and removable batteries?! Oh and now everything depends on the S7 and they were just saying that about the S6!

      Samsung could have kept their metal design and a removable battery and microSD but they didn’t want to. In less than two years all of those S6 owners will have to buy new phones as their batteries will be dead and many of those will have to upgrade early as they will have no memory left o storage anything on that 32GB!

      So moral of the story is Samsung became an “innovator” and “redesigner” and it all bombed! So taking away choices from the consumer backfired, man I would have never saw that coming?! According to reports they sold “almost” as many S6 phones as they did the S5… The s5 which bombed worse than any Samsung phone and they were left with millions of units on shelves in warehouses. Try adding things users want like stereo front speakers, IR blaster, microSD card slot, removable battery, etc…

      • Rob

        My S6 Edge battery works even better than it did when I bought it, mainly due to a patch released from my carrier a few patches ago. I have t the 64Gb version and haven’t gone below the 30 Gb mark yet, even with quite a few songs, a couple of movies, and tons of apps on it…not to mention photos/videos, etc. Not really feeling the need to be concerned about a removable battery or SD card slot. Granted, I’ve had it for a year now, so who knows…maybe another year means less space and battery…but I doubt it.

        • Fifth313ment

          I don’t know how you haven’t gone below 30GB of your 64GB device?! You must never use your device. The phone has like 16GB out of the box used. So now we have 48GB and add in our fav apps like facebook, etc and now you’re down to 44GB, add a few games and now we are down to 40GB. Now add a few movies, music, etc and 35GB. Now take some vids in 4K and pics with the camera and you should be down to 0 fairly fast if you actually use your phone. I have a 64GB microSD and 32GB onboard (96GB) and I constantly have to use Google photos to upload my pics and then delete them from my phone to make room for new ones. And I have very few apps, a few games but that is it (no facebook, twitter, etc here).

  • Scr-U-gle

    You are joking Androne Authority? The S6 looks like an iPhone 6 and 4, so much so I nearly walked into a Samsung branded phone store to ask for an iPhone. What happened to premium plastic?

    They even employed someone vaguely associated with Jony Ives to copy as much as possible.

    And fresh blood? The promoted daughters and the same losers that have been busy looking to Cupretino for the last nine years.

    Samsung Mobile is going the same way as Motorola, Nokia and Blackberry, down the plug.

    • it’s me tim-cock.

      Says who fool? Keep having those wet dreams OK.

      • Scr-U-gle

        Says everyone who sees an S6.

        Premium plastic? Gone.

        Family members promoted? Yes.

        Copy of an iPhone? Pretty much everyone recognises this apart from moroids like you!

        Next you’ll be telling us how 64-bit and fingerprints scanners that actually work ar ‘marketing hype’.

        Funny boy, next!

        • Andreas Larsson

          Hahaha silly fanboy 😂

          • Scr-U-gle

            Great contribution moroid, I see you are the weakest kind of troll with nothing of value or even the slightest wit to add.

            What do I expect from the least educated, worst employed and paid the least!

          • Andreas Larsson

            You’re right, I shouldn’t sink to your level, im sry Mr butthurt

  • KB ADMIN

    Uhm, I just need a bigger battery that is removable and I’m all set.