Samsung Is Reducing Production Costs And Phone Models By 30% Due To A Decrease In Profit Margins

Samsung Electronics Co. announced that they will launch fewer smartphones next year. This means that we will see fewer smartphone product lines from them. Samsung has released quite a few smartphones with nearly the same specifications and design. Galaxy Cores, Ace, Grand, Mega, and the various Galaxy S models are just a few of the many that Samsung has released.

Actually we can’t really say how many they’ve released and I’m pretty sure that most people have already lost count. Everyone agrees that Samsung is releasing too many phones.

Robert Yi, head of investor relations, said in a presentation in New York that the company will cut the number of smartphone models by a third. This is due to the fact that Samsung’s mobile phone profit margins were at a 50% decrease compared to last year. This may have been due to competition from other companies and Chinese smartphone manufacturers making cheap low and mid range Android devices.

Due to this steep decline in profit margins, Samsung has had to issue a memo to its suppliers to cut costs by 30% . They also intend to “increase the number of components shared across mid- to low-end models, so that we can further leverage economies of scale,” as said by one executive.

For consumers what this means is that there will be fewer smartphone models released by Samsung in 2015. They will focus on increasing profit by making more unique products. They may try to release more high-end devices with more of a gap between product releases.

Samsung Is Reducing Production Costs And Phone Models By 30% Due To A Decrease In Profit Margins