Related Articles
Andrew Hoyle/CNET
Samsung will stop producing so many models of smartphones and focus on a core set of devices in the new year, the company said Tuesday.
Speaking to investors in New York, Samsung’s head of investor relations, Robert Yi, said his company plans to cut the number of smartphone models it produces in 2015 by 25 percent to 30 percent, The Wall Street Journal reported.
Though Samsung is still a juggernaut in the mobile business, the company has watched its smartphone business start to falter in key markets, such as China. In China specifically, chief competitor Xiaomi has been able to increase smartphone shipments and get consumers excited about its products by delivering higher-end devices at budget-conscious prices.
Meanwhile, Apple, with its new iPhone 6 and iPhone 6 Plus, has moved to offer smartphones with larger screens, which had been a key point of distinction for Samsung.
The South Korean company’s latest quarterly returns put the situation in stark relief. At the end of October, Samsung said that third-quarter income in its mobile business tumbled 74 percent from the previous year and that its operating profits were the lowest they’d been since the middle of 2011. It also warned that smartphone competition would be fierce toward the end of the year.
Related stories
- Five ways Samsung can overhaul its ailing smartphone business
- Samsung’s steep Q3 profit decline shows ongoing struggles in mobile
- Samsung’s not done: Tech giant looks to new phones, materials to rally
- Samsung’s real Achilles’ heel: Low-end, emerging markets
- Samsung’s next big thing: Gaining street cred in Silicon Valley
Samsung is also dealing with increasingly strained margins as its marketing costs have risen considerably. In the third quarter, the company generated just 7 percent margins on smartphones, down from 15 percent in previous years, the Journal reported.
Prompted by the shifts, Samsung had already said that it plans to “fundamentally reform” its product lineup.
Here’s how overwhelming Samsung’s array of products has become: In just its flagship Galaxy S line, Samsung offers five models beyond the namesake Galaxy S5 : the knockabout Galaxy S5 Active and Galaxy S5 Sport; the more modest Galaxy S5 Mini; the Galaxy K Zoom with a higher-end camera; and the Galaxy S5 LTE-Advanced for higher Internet speeds.
There’s also the Note phablet line , the new, metal-clad Galaxy Alpha devices and a long list of other Android and Windows Phones devices.
The idea behind streamlining its offerings is simple: the company will be able to cut its overall costs and find ways to improve efficiency in production. Marketing dollars will also be spread across fewer products. Samsung is also planning to use the same components in multiple products to help cut costs.
Yi didn’t say how many smartphones the company will ship next year. The company did not respond to a request for comment.
CNET’s Shara Tibken contributed to this report.
