Galaxy S7 and mid-range phones boost Samsung’s profit

The company has forecast a profit of $US5.7 billion in the first quarter

Samsung Electronics’ flagship Galaxy S7 smartphones and sales of its mid-range devices in emerging markets have likely helped the company boost its operating profit in the first quarter.

The South Korean company has forecast that its operating profit for the quarter was likely to be 6.6 trillion won ($US5.7 billion), an over 10 per cent increase from close to 6 trillion won in the same quarter last year.

Revenue likely increased 4 per cent in the quarter to 49 trillion won, according to the company’s guidance.

Samsung has been in the past sandwiched between Apple’s iPhone at the high end and products from Chinese vendors at the mid-range and low end. But its flagship Galaxy S7 and the curved-screen version, the Galaxy S7 edge, launched commercially in March, appear to have made deep inroads into the high-end market.

Features of the S7 devices such as waterproofing and the revival of expandable memory have proven to be attractive, said Kiranjeet Kaur, research manager at IDC Asia-Pacific.

The company has been able to hold its own against aggressive China-based vendors in emerging markets, because these players have been largely limited to online sales particularly in markets like India, while Samsung has combined its traditional strength in offline distribution with new inroads in online channels, Kaur said. But the threat from the Chinese vendors will always loom large for Samsung, she added.

Samsung also has a wider range of products than the Chinese companies across various price points, including the low-end. Its mid-range products like the Galaxy J series and Galaxy A series are doing well in emerging markets, Kaur said. The J series phones, priced at $US100 to $US250, are also doing well in online sales, she added.

The company's chip business, which accounts for about half of profits, may not have done very well amid a market oversupply, and may see its first decline in profits in over three years, according to The Wall Street Journal.

Samsung is expected to release its full results at the end of this month.

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Tags retailsmartphonesAppleiPhoneGalaxy S7Galaxy S7 Edge

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John Ribeiro

IDG News Service
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