Low Cost Is The New Smartphone Mantra
South Korean consumer devices manufacturer Samsung 's share price slumped to a nine-month low at the end of June amid concerns over slowing sales of its flagship Galaxy S4 smartphone . Declining average selling p rice (ASP) of smart phones globally led us to believe that a seismic shift towards lower price portfolio could be underway. That said, BMI predicts that Samsung's competitive positioning should provide some support to its bottom line and equity performance.
Falling ASP dimmed S4 Outlook
Data suggest that consumers are holding off buying expensive handsets that are "evolutionary" rather than "revolutionary" in nature. In other words, incremental innovation no longer commands such a high premium. The average selling price of smart phones has declined globally from US$443 in 2011 to US$372 in 2013. For Asia's consumer devices giant Samsung, weaker demand for its much-hyped Galaxy S4 has led several sell-side analysts to cut July monthly order forecasts for the S4 by 20-30% from 10mn to 7-8mn. BMI believes the focus for the mobile industry is moving towards low-price smart phones, which means that the S4 is unlikely to see a reversal trend in its volume sales slide in the near term.
|Samsung Must Follow The Market To Remain Market Leader|
|Smartphone Average Selling Price (ASP) (US$)|