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From the model it brings to the market and the way it selects its smartphone components, Samsung Electronics has had to go through a painful process of moving away from its past in order to staunch a decline in the smartphone business. For instance, when planning the camera specifications for its flagship handset, Galaxy S7, the company chose to defy industry convention and chose fewer pixels in order to provide improved low-light performance and autofocus features, a tactic that contributed to the device’s early success. An executive of the company said that they had also chosen to pare back its product line-up and had managed to streamline production by overcoming internal resistance.
The mobile business unit of the South Korean firm has now stabilized and actually reported its best profit in almost two years in January-March. However, the smartphone growth is still low compared to the past, which means the company is in search of the ‘next big thing’. The vice president of smartphone product planning at Samsung, Kim Gae-youn said that they had gotten to a stage where they can still earn a profit even if the market becomes saturated, but they have to be careful not to make a mistake. He said that the firm was capable of holding its ground.
The smartphone giant peaked in 2013, but it was too slow to adjust to a changing market, which became evident when there was a sharp decline in mobile profits. As opposed to the Chinese offerings, Samsung’s budget devices turned out to be unappealing and overpriced. Also, its flagship Galaxy S smartphone in 2014 ended up a major failure. This led to a cull amongst the executives and worried investors that the firm would not be able to recover as its rivals including China’s Xiaomi and Huawei Technologies and Apple Inc. continued to gain market share at its expense.
There was no one magical fix that Samsung could use, but two years back, the company began an overhaul, which included a move away from making a phone-for-all-needs and focused more on a product line-up that would enable economies of scale. It revamped the design of its devices by using curved screens and metal frames and incorporated high-end features like organic light-emitting diode (OLED) to its mid-tier and low end products. As Samsung was preparing to launch its Galaxy S7, executives couldn’t decide whether to include a 12-megapixel camera that works better in the dark and has autofocus or a 16-megapixel camera.
In a rare change, they decided to go with 12-megapixels and it marked a change in approach for a firm that’s known for touting the highest specifications for its flagship devices. Kim said that the executives had to be convinced and they only agreed when they were shown data that consumers are looking for more than just a high pixel count in their cameras. The move turned out to be a success as the camera became a major selling point for the Galaxy S7 and the devices beat expectations. In fact, they could set a new record for first-year sales.