The bleeding in Samsung’s mobile business hasn’t stopped, and not even its own flagship could stanch it. The Wall Street Journal reports that, despite its strong start and popularity in the United States, sales of the company’s Galaxy S5 smartphone fell far short of expectations—as much as 40% less than projections pegged.
Now Samsung co-chief and mobile honcho J.K. Shin could have reason to fear for his job.
The Galaxy S5 reportedly sold 12 million units over its first three months of availability, about 4 million less than its predecessor, the Galaxy S4. While sales in the U.S. actually increased, the American market was the only one that saw gains. But that apparently couldn’t overcome waning interest in other regions, like China, where domestic smartphone makers like Xiaomi give the South Korean tech maker a run for its money.
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Bad Timing
Xiaomi, now the world’s third largest smartphone maker, claims to have no interest in entering the U.S., where Samsung still reigns. But in the Chinese market, where they go head to head, the S5 fell more than 50%.
The S5 initially debuted with a strong showing, but sales appear to have flatlined. Last May, Shin boasted to the Journal that the company moved 11 million units in its first month, topping the Galaxy S4 by a million units. The math reveals a sobering detail then: If the latest figures are true, it would mean Samsung only sold another one million S5 phones over the ensuing the two months.
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As the 5.1-inch S5 flatlines, mediocre shipments of the huge Galaxy Note 4 don’t seem to help. The 5.7-inch “phablet” pulled in first-month sales of 4.5 million units—half a million less than the Note 3.
For Shin, the bad news couldn’t come at a worse time. Word has it that Samsung is on the verge of some organizational rejiggering—the result of which could cut executive compensation and oust the incumbent mobile head. In his place, current co-chief B.K. Yoon may step in to run the company’s mobile division, people “familiar with the matter” told the WSJ.
Though he runs Samsung’s key home appliance and TV divisions, he’s less expensive than Shin ($3.3 million, compared to Shin’s $11 million earnings). The move, if it happens, would place phones, tablets and watches all under the same umbrella.
Photo by Adriana Lee for ReadWrite
