Samsung's Galaxy S5 outsold the iPhone on its opening weekend

... but mobile sales fell 4% in the first three months of the year. The electronics manufacturer faces pressure to launch a lower-cost version of its mobile phones to get into emerging markets.

by Emma Haslett
Last Updated: 08 Jan 2015

The majority of us may have whizzy smartphones, but it's only been two years since Samsung pushed Nokia off its crown as the world's biggest mobile maker (suggesting Snake is still a popular time-killer in emerging markets).

Now Samsung has reported a 4% decline in mobile phone sales, with revenues falling to 33.4 trillion won (£23.3bn), in the first three months of the year. Although profits did rise, from 7.3tn won in the final quarter of 2013, to 7.57tn won between January and March.

To be fair, the popularity of Samsung's Galaxy range continues apace: in fact, figures also published yesterday (by iQmetrix, a North American retail management software provider) suggest it sold more of its new Galaxy S5 handsets during its launch weekend than Apple sold iPhone 5S devices when ît was launched.

That suggests the problem isn't so much unpopularity, as a combination of fierce competition between manufacturers pushing prices down and the market for smartphones in developed markets slowing.

That's why a lot of technology companies - not just mobile phone manufacturers, but the likes of Facebook and Google - are focusing their energies on emerging markets, where smartphones are becoming increasingly accessible. On MT's visit to Rwanda in February, mobile phone giant Tigo had just launched a smartphone at a bargain basement price. 'People can't believe they can afford a smartphone,' a sales assistant told MT. 'It's completely sold out.'

So the onus is on Samsung to find a way of developing a lower-cost model so it can build that base in emerging markets. Although it faces still competition from manufacturers who have already got there - particularly in China, where the likes of Xiaomi, Huawei and ZTE are eating up the market.

Still, net profits rose to 7.57tn won in the first quarter, up from 7.3tn in the previous three months. So it must be doing something right.

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