Samsung and HTC

Samsung Galaxy S4

Samsung Galaxy S4

Korean electronics giant Samsung saw its shares tumble on July 8 as it announced June quarterly earnings of 9.5 trillion won ($8.5 billion), which was slightly below the expected 10 trillion won forecast by analysts (they’re a tough bunch to please). Shipments of 74 phone units during the quarter was also 2 million off expectations, which prompted several bank analysts to downgrade Samsung’s stock.

Taiwanese phone maker HTC suffered a similar fate–its shares fell 7% Monday–albeit on a far worse outlook, with its earnings falling drastically short of expectations.

During the quarter, both companies released shiny new phones, Samsung the Galaxy S4, and HTC the One. Both phones have been hits, and are widely critiqued as being superior on the smartphone market in terms of build quality, processor speed, screen resolution/size, and having the latest Android OS incarnations.

For HTC, its troubles are deeply ingrained. It hasn’t been able to gain traction in the developed markets and it relied the One to launch a comeback. Unfortunately, it fumbled the execution and due to logistical and supply chain issues, the One was delayed from Feb to Apr, which is the same month as the release of the much more bally-hooed S4. Factoring in high marketing expenses, and HTC may be running out of cash–and time–to turn itself around. It’s a shame really, as the One might just be the best-looking Android device on the market.

Samsung’s issues are more benign. Analysts may have hyped it up too much last year on unexpectedly stellar S3 sales, and Samsung now suffers from sky-high expectations, which is a consequence of its own success. The concerns here are that there are market headwinds that the high-end smartphone market is reaching saturation, Samsung’s focus on hardware (instead of hardware-software ecosystem), and that Samsung’s other businesses–namely the slow-growth TV business (in which it is the world leader)–may be slowing the company down.

If Apple’s recent success (or Sony’s failure, if you prefer) is a lesson, it’s that winning the war takes more than a great product. It takes a combination of timing, execution, vision, and marketing. It’s a formula that is hard to sustain, even for Apple.

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