Samsung expects their 2014 smartphone sales to increase only 14 percent, saturation to blame

BY Stefan Constantinescu

Published 10 Dec 2013

Samsung plans on shipping 290 million smartphones this year. That’s a goal they’ll likely have no problem reaching. It’s next year’s goal that’s somewhat controversial. Original reports said the company wanted to ship 360 million phones in 2014, an increase of nearly 25%. Apparently that number has now been reduced to 330 million, which an increase of approximately 14 percent. Considering the rapid pace of growth in the smartphone market, growing 14 percent isn’t exactly impressive.

What’s to blame for the slowdown? A combination of things. First, there’s the high end. The kind of people who can afford a $650 phone likely already have one and are probably going to replace it only once every 18 to 24 months, so that market has effectively been saturated. Then there’s the low-end, and I’m not talking $180 Moto G low-end, I mean the $49 Android phones sold on the streets of countries like India and China. That’s an area of the market that Samsung doesn’t want to compete in because the margins simply aren’t there.

But the biggest threat to smartphone growth is ironically the tablet. If you have $250 to spend, and you live in a country where that’s about as much money as you’ll make in a month, do you want to buy a mid-range Galaxy device or a Nexus 7 caliber tablet? You can keep your $20 Nokia, that’s a given, but now you’ll also bring your tablet with you wherever you go.

Is Samsung actually in trouble? I don’t think so, and numbers don’t lie. Pay attention to their financial results over the next few quarters and you’ll gain some insight as to what’s truly happening.