Samsung bets smartphone unit turnaround on Note 10, Galaxy Fold launches

Smartphone demand hasn't been so hot for Samsung. Will the launch of new premium devices turn around its mobile unit?
Written by Larry Dignan, Contributor

Samsung's mobile communications head said the company won't provide specific volume targets for the Galaxy Note 10, but said it is expected to "achieve higher volumes versus its predecessor, Note 9."

Speaking on Samsung's second quarter earnings conference call, Jong Min Lee, vice president of Samsung's Mobile Communications Business, was asked about the Note 10 launch as well as the Galaxy Fold and the potential impact on reviving smartphone sales.

Lee said via a translator:

The new Note 10 will even further upgrade the unique values of the Note series. It will feature an S Pen experience that is even more intuitive and is more rich and expanded. Some of the highlights of the Note 10 would be the more powerful performance, also more enhanced productivity-related functions and also an optimized multimedia experience for the 5G network. Even though it's early for us to present any specific volume targets, we're expecting the Note 10 to achieve higher volumes versus its predecessor, Note 9.

Samsung's issue is that the Note 10 launch, which happens at Unpacked Aug. 7, arrives as the company confirmed that the Galaxy Fold will also arrive following a false start over concerns about its screen.

Lee noted that the Fold will be in limited quantities and markets, but foldable screens will work their way into the product portfolio. Samsung's smartphone unit is in a bind as it tries to be more cost competitive in the mid-tier and lower end devices while launching premium devices ahead of a 5G rollout that hasn't quite taken off yet.

Meanwhile, smartphone demand has been down.

Lee said:

In the second quarter followed by the relatively weak season period, overall smartphone demand decreased due to a number of global macro variables. On a quarter-on-quarter basis, our smartphone shipments increased as new A Series models, including the A50 and A70, showed stronger sales performances than their previous models. However, the sales volume of our flagship models, including those of the S9 and Note 9, decreased quarter-on-quarter as the launch of -- effect of S10 became weaker and the demand for premium segment was shrunk. Profit also decreased quarter-on-quarter because of increased cost associated with intensified competition in the mass market and inventory adjustment of older models.

Samsung's plan is to leverage a seasonal demand bump and be efficient to weather economic turmoil due to trade wars. Samsung also plans to improve efficiencies to preserve profits.

Like Apple, Samsung faces a few key questions in the premium market. Those questions include:

  • Will the Note 10 garner demand for what is likely to be the premium priced 5G version?
  • Does 5G really warrant a premium price for the Note 10?
  • Can mid-tier smartphone vendors continue to take share from premium devices?
  • And will tech buyers hold out on smartphone upgrades until 5G networks become more common and devices live up to the hype?
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