Samsung is facing a good news / bad news situation. Smartphone sales are up but the percentage of handsets with the highest ASP, or average sales price, is down.
While the company's Galaxy S line, now in its sixth iteration, has helped propel Samsung to the no. 1 sales spot worldwide, it faces more competition at the high-end.
Apple has always been a main competitor but China-based Xiaomi and Huawei are on the upswing. Samsung has recently devoted time and effort in the low- and mid-range markets both with its Tizen-based handsets and the Galaxy J line running Android. It's the latter that's helping to keep Samsung's global sales crown, says Counterpoint Technology Market Research:
"Due to introduction of competitive affordable J series of smartphones while S6 series undergoing price correction across many markets helped Samsung see a healthy uptick sequentially."
The Wall Street Journal notes that Samsung's changing smartphone mix is apparent of late.
In the third quarter of 2015, 38 percent of Samsung's shipments were priced at $200 or less, up from 30 percent in the same quarter last year. And the high-end, larger profit handsets make up less of Samsung's total market. Forty percent of Samsung phone shipments last quarter cost $301 or more, down noticeably from the 55 percent of expensive handsets in 2014's third quarter.
What's the impact?
Samsung is struggling to keep its no. 1 spot in smartphone sales and trying to maintain it with less expensive phones that generate less revenue. Indeed, Counterpoint's research suggests the Galaxy J outsold the Galaxy S, Galaxy Note and Galaxy A series of phones.
If -- and it's a big if -- Samsung can offset the lower revenue on a per handset basis by selling massive quantities of the Galaxy J, the strategy could work, allowing Samsung to retain the sales lead and generate higher profits.
Unfortunately, the low- and mid-range phone market faces just as much, if not more, competition from an array of Google Android hardware partners. Samsung will have to deliver some unique experiences or features to compete at the same price in those markets.
Even then, there's no guarantees: See the Galaxy S6 Edge and Galaxy Note 5 as examples. They offer different experiences thanks to secondary displays and a digital stylus, yet even that isn't compelling a growing number of consumers to spend $700 or more for the uniqueness.