Samsung has to look beyond smartphones for growth
Samsung may have to find an alternate growth area to counter slow sales of its smartphones. Although the Galaxy S5 got off to a great start by selling 30 percent more than the Galaxy S4, analysts estimate that the device would not be able to match overall sales of the Galaxy S4. The handset manufacturer is facing slowing sales in the European and American markets, and facing a lot of challenge in the Chinese and Indian markets from local vendors. Although Samsung manufactures a lot of hardware in addition to mobile devices, it is the smartphone category that nets more than half of the annual profits.
IM Investment and Securities analyst Lee Min-Hee stated that a new growth driver was necessary for the South Korean manufacturer considering that the high-end smartphone market was “already saturated.” Samsung does cater to the mid-range and entry-level segments, but is primarily reliant on sales of its flagship devices as these segments are highly contested. One area the manufacturer can focus on is the wearable segment, which is said to be valued at $10 billion by 2016. Samsung has a slew of new wearables in the Gear 2, Gear 2 Neo and Gear Fit, and has stated that it would invest heavily in this segment over the coming years. With smartphone sales slowing, it is likely that the manufacturer will look to wearables. In addition to the smartwatches already released, Samsung is be working on a device with a built-in SIM card slot, dubbed the Gear Solo. A trademark filing in the US revealed that another device by the name of “Gear Now” might launch sometime later this year.