Samsung's U.S. Galaxy S III launch: Victim of its own success?
The world's largest smartphone maker, Samsung, has the highest U.S. smartphone market share, and has all but single-handedly propelled Android's success over iOS.
But Samsung is starting to feel the pressure, born out of its own success.
The Korean-based smartphone giant recorded profit of $4.46 billion in its first quarter alone, giving no indication that the company could find the weight and burden of its booming smartphone sales overwhelming.
But delays to its latest Galaxy S III model could signal a tumultuous time for the company --- and its loyal customer base.
Samsung mobile business president J.K. Shin said this week the company expects to see 10 million sales of its next-generation Galaxy S III smartphone during July.
But it is unknown whether Samsung is playing it safe and giving a conservative estimate, or revised down the expected figure to take into account the troubles it faces at home and abroad.
What is clear, is following a successful launch in Europe, the vast bulk of that figure will likely not come from U.S. customers.
Aside from the forthcoming smartphone, Apple was granted a preliminary injunction this week barring U.S. sales of Samsung's Galaxy Tab 10.1 earlier this week. Apple must set down a bond of $2.6 million to secure its tablet-making rival against damages should the injunction be overturned.
Apple did not say whether it would, or indeed when it might post the bond. Update: Apple has posted the bond, banning the Samsung Galaxy Tab 10.1 from sales in the United States. See here.
This poses at least one headache for the company away from its Galaxy S III launch. But Apple's suit on its flagship tablet product is now firmly on the back-burner as the last thing Samsung is worrying about.
All the major carriers are struggling to either stock the phone or keep up with the demand for the next-generation Android-powered smartphone.
Sprint pushed back the Galaxy S III's release date by more than a week, while T-Mobile said it has a limited supply. Verizon has still yet to make the long-awaited smartphone available. AT&T said "manufacturer supply constraints" were delaying pre-ordered smartphone shipping out to customers, according to MarketWatch.
Samsung said its problems were due to the outselling of the Galaxy S III smartphones, rather than a shortage of specific components: "Our supply hasn't been able to meet the soaring demand, but the situation will improve soon," a spokesperson said.
But if major U.S. stores aren't selling the devices yet, or facing "manufacturer supply constraints," Samsung's excuse doesn't seem to fly.
The U.S. is one of Samsung's strongest markets, despite its poor market share figures in the tablet market. If the Galaxy S III can't make it to the U.S., the company has to find revenue elsewhere.
The Wall Street Journal recommends China, particularly with its need for a smartphone maker to fill the low-end device space. As long as Samsung can keep the U.S. market happy --- Apple's own legal issues aside --- a sudden rush to an emerging market would not be necessary.
Apple's involvement in this is both a minor and a major one. For the time being, Apple can sit on its Samsung sales injunction quite content in the fact that Samsung is barely selling any of its phones. All the time, new customers are opting for iPhones, or other Android devices.
Financially, Samsung is faring the storm well, but its share price suffered following analysts' expectations that the slow rollout will affect its second-quarter results.
"Despite the tough economic situation in Europe and problems with supplying components for the Galaxy S III, the second-quarter earnings will be better than the first quarter," Shin said, according to the Press Association.
At market close on Monday, Samsung shares dropped more than 4 percent, wiping off around $6.4 billion off the company's market cap.
Image credit: CNET.
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