The smartphone sales leader has a problem.
In its most recent quarter, Samsung is estimating a 4.2 percent drop in operating profit as Galaxy S6 phone sales were below expectations. Part of the issue is a bad assumption on Samsung's part. It thought it would sell four Galaxy S6 handsets for every Galaxy S6 Edge but there's higher demand for the latter that Samsung can't meet.
That's an easy problem to solve though, right? Just boost production of the Edge model and all is well.
Unfortunately, it takes time to make that change. Plus the company has to find ways to move excess Galaxy S6 inventory, which could result in price drops and therefore, lower profit margins.
It strikes me that much of the problem is at the high-end of Samsung's phone line while the low-end is surprising: Samsung's Tizen-powered Z1 crossed the one million sales mark in India.
Compared to the tens of millions of Galaxy phones the company sells, it's difficult to call the Z1 a success. And I'm still not sold on Samsung's ability to turn Tizen into a Google Android challenger, although that's precisely what Tizen represents to the company: It would offer Samsung a clean break from pack of peers that use Android.
Yet, the company is pushing on with Tizen in a bottom-up approach, starting first with the sub-$100 Samsung Z1 and likely follow-up handset, the Samsung Z3. Later this month is the Tizen Developer Summit and there's evidence to suggest the Z3 will make its debut there.
Based on specs that leaked this week, it appears the Z3 will be a noticable step up from the prior model. Sam Mobile reports a 1.3GHz quad-core Spreadtrum SC7730S processor inside the phone, 1.5 GB of memory, 8 GB of storage, 8 megapixel camera sensor and a 5-inch HD super-AMOLED display.
That list of specifications isn't leaps and bounds better than the Z1, nor does it represent a Tizen-powered challenger to the Galaxy S6. I'd be shocked if the phone cost more than $200, for example. And I expect Samsung to release it in a broader range of countries: In April, Samsung expanded its Tizen app store from two to 182 regions.
I'm still more pessimistic on Tizen than I am optimistic but Samsung could yet prove me wrong. Amid Galaxy S6 woes, challenges from other Android flagships and Apple iPhones, building the Tizen base from low-cost to mid-range handsets makes sense.
Can Samsung convince the world that it needs another mobile platform though? That's the big challenge going forward while Samsung rejiggers its handset production lines at the top end.