The Transport Guy: Samsung is in a pickle and its newest phone isn't helping

Steve Kovach May 19, 2015 at 12:14PM

Samsung's bet on a new, well-designed flagship phone isn't paying off as well as the company had hoped.

The company told the Korea-based Yonhap News Agency that it has shipped 10 million units of the new Samsung Galaxy S6, which launched about a month ago. That number is down from the amount of units sold for a similar time period for Samsung's last flagship phone, the Galaxy S5. Samsung sold 11 million Galaxy S5 phones during the first month of availability.

It's important to note that these are shipments, not sales, for the Galaxy S6. It's unclear how many people actually bought the Galaxy S6.

This is the same narrative we've been seeing for the last year with Samsung. Companies like the Chinese startup Xiaomi have figured out how to make Android phones that are just as good as Samsung phones but cost about half as much. Consumers are buying those cheaper phones instead, especially in China, which is one of the largest growth markets for smartphones.

Meanwhile, Apple released two big-screen iPhones last year, finally catching up to the rest of the industry. Apple has said it's seeing more people switch to the iPhone from Android since the launch of the iPhone 6. Apple has also posted record iPhone sales in the last two quarters since the iPhone 6 launch.

In its last earnings report, Samsung's profits fell almost 30% from the year-ago quarter, mostly due to the decline in smartphone sales. Galaxy S6 sales weren't reflected in that quarter's results, but the hope is that making a new phone with a premium design and cleaner software would help reinvigorate the company's smartphone business. We'll get an even better idea of how the Galaxy S6 affected profits when Samsung reports earnings for the second quarter of this year, but it's not a good sign that initial shipments are slower than last year's phone.

In short, Apple is dominating the high end of the smartphone market and attracting more users from Android. Those who stick with Android are choosing cheaper phones from Xiaomi and others. Even though the Galaxy S6 got great reviews, it doesn't do enough to differentiate itself from the rest of the cheaper Android devices out there.

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Samsung is in a pickle and its newest phone isn't helping from Business Insider: Steve Kovach