5 Hurdles Samsung Faces In The Mobile Market

Yet Another Quarter Of Declining Operating Profit

Samsung may have surprised analysts with the release of its widely praised Galaxy S6 smartphone, but the South Korean electronics company still has a ways to go, as reflected in its Q1 pre-earnings guidance released Tuesday.

Samsung said it expects a 30.5 percent decline in operating profit for the quarter ended March 31 from the same quarter last year. While that figure is better than the 35 percent decline forecast by a Dow Jones survey of eight analysts, it still marks the company's sixth consecutive year-over-year decline in profit, according to the Wall Street Journal.

Why is Samsung, which only three years ago was a leader in the mobile space, struggling with operating profit? Following are the main problems Samsung faces in the mobile market.

5. Pressure From High-End Smartphone Companies

Companies like Apple are slowly cannibalizing Samsung sales because of the popularity of their high-end smartphone designs.

Cupertino, Calif.-based Apple recently edged closer to Samsung smartphone sales levels, selling 74.5 million units, compared with Samsung's 75.1 million units, in the fourth quarter of 2014.

Apple's newest smartphones, the iPhone 6 and iPhone 6 Plus, released in late 2014, attracted customers with their large screens and high-end manufacturing design features, compared with the Samsung Galaxy S5's plastic frame. These features helped push the popularity of the iPhone in China, where Samsung handsets formerly reigned as the most popular devices.

4. Midrange Smartphone Vendors Focusing On Emerging Markets

Samsung has also lost global market share to low-end and midrange phone vendors, such as Xiaomi, Huawei and ZTE, who took valuable share from customers in emerging markets like India.

Chinese vendor Xiaomi, for instance, has gained immense popularity in China at the low end, experiencing 178.6 percent growth in its smartphone market share in the fourth quarter of 2014, according to market research firm IDC. Samsung, on the other hand, faced an 11 percent year-over-year decline in the same quarter.

These vendors specialize in low-priced products with cheaper manufacturing materials, tightening pressures around competitive prices in the smartphone market. In turn, Samsung has struggled to address this problem and differentiate itself from its low-end competition.

3. Struggling Tablet Sales

Samsung's other mobile device, the tablet, is also experiencing struggles in the mobile space.

Samsung has capitalized on the tablet space through its Samsung Galaxy Tab S series, Android-based tablets that range in screen size from 7 inches to 12.2 inches. But according to a report by market research firm IDC, Samsung shipped 11 million units in the fourth quarter of 2014, a year-over-year decline of 18.4 percent from 2013.

The company released its Tab 4 series in 2014 and is trying to focus on mid- to high-tier tablets to help its bottom line, but its market share in the tablet market will likely continue to struggle, according to IDC.

2. Lack Of Enterprise Features

While other hardware vendors such as BlackBerry and Microsoft have carved out a niche in the business space through enterprise-equipped mobile features and operating systems pushing workplace tools, Samsung still has not gained a large foothold in the enterprise, focusing instead on the consumer market.

Samsung has tried to expand its Samsung Knox feature by linking with Good Technology in February to create an Android solution for organizations to securely mobilize apps and content.

1. Uncertain Smartphone Appeal (Will Galaxy S6 Fly?)

Despite a rocky past, Samsung is hoping to turn around its future -- which is best reflected in its new Galaxy S6 release.

The Galaxy S6, to be released Friday, contains more high-end designs, such as aluminum and Gorilla Glass materials instead of cheaper plastic frames, and improved features, such as front and rear cameras with F1.9 lenses and high-resolution sensors.

"By listening to our customers, and learning from both our success and missteps, we continuously push forward new technologies and ideas," said JK Shin, CEO and head of IT and Mobile Communications Division at Samsung Electronics, in a release.