Things won’t improve for Samsung’s mobile division next quarter but this is how it will respond

Samsung doesn’t provide shipment figures for smartphones in its quarterly earnings releases so it’s unknown precisely how many units the company has shipped in the second quarter of this year. We will soon see estimates from industry trackers, though.

The company today reported its earnings for Q2 2017. It has seen strong sales throughout the quarter which is the why the mobile business has brought in 30.01 trillion won ($26.9 billion) in revenue.

However, Samsung’s profit margins have taken a hit. The division’s operating profit for the quarter came in at 4.06 trillion won ($3.6 billion) as opposed to 4.32 trillion won ($3.8 billion) in Q2 2016.

The Galaxy S8 was Samsung’s flagship product throughout the quarter and the company says that it saw strong sales of both models. The Galaxy S8 might actually have played a big role in generating a big chunk of the profits because Samsung’s affordable options have taken a hit.

Samsung mentions in its earnings release that even though it saw strong sales of premium smartphones, its total smartphone shipments have remained at a similar level quarter-over-quarter due to decreased sales of mid-range and low-end smartphones.

It seems that the company has been let down by its affordable handsets but then again, it’s facing tough competition in that segment of the market, particularly from OEMs based in China. The Galaxy S8’s performance in the market could have been converted into more profit for the company had the mid-range and low-end products not seen decreased demand.

Samsung expects demand for smartphones and tablets to increase in the second half of this year due to strong seasonality. However, it also expects competition to intensify as competitors like Apple will release new smartphones. Samsung will counter that with the launch of a new Galaxy Note handset and it will also focus on retaining the strong sales momentum of the Galaxy S8.

The company is also going to increase lineup efficiency in the low-end and mid-range segments. It will actively respond to demand from emerging markets and maintain profitability with revamped mid-range offers like the Galaxy J series 2017 editions.

Samsung expects the mobile division’s revenue and profit to decline quarter-over-quarter in Q3 2017 due to increased marketing expenses in connection with the launch of its new Galaxy Note flagship as well as a slowdown in sales of the Galaxy S8 and Galaxy S8+.

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