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Samsung profits down as Galaxy S6 misses expectations

by Todd Haselton | July 30, 2015July 30, 2015 7:00 am PST

The Galaxy S6 and Galaxy S6 Edge are fantastic smartphones, but they weren’t good enough to swing Samsung’s mobile business back to the highs it once enjoyed. The company recently reported a fifth straight annual decline in profits, down 8 percent year-on-year, largely as a result of its lackluster mobile unit.

According to The Wall Street Journal, Samsung didn’t have enough Galaxy S6 Edge units on hand and instead is sitting on “unsold stock of the flat-screen Galaxy S6 smartphone.” That means it built far too many Galaxy S6 units that are still sitting in a warehouse somewhere, waiting for an owner to come by and scoop them up. It also means, at least in our view, that you might start to see some pretty good sales on that phone as Samsung tries to get rid of the extra inventory.

Another area that may have hurt Samsung’s phone sales was the average selling price (ASP), which is reportedly now below $300 for each smartphone. The less Samsung makes off of each phone sold, the lower its profit margins on each sale are, which explains why its mobile profits are down for the quarter. It’s also another reason why Samsung likely decided to launch the Galaxy Note 5 and the rumored Galaxy S6 Edge Plus early — an event is set for August 13 in New York City.

Those devices may help it continue to attract consumers, particularly in the face of Apple’s looming iPhone 6s and iPhone 6s Plus launch in September, but they won’t help Samsung if it doesn’t better manage sales expectations ahead of time.

Todd Haselton

Todd Haselton has been writing professionally since 2006 during his undergraduate days at Lehigh University. He started out as an intern with...