Amid Xiaomi rise, Samsung banking on foldable phones

Amid Xiaomi rise, Samsung banking on foldable phones

SamMobile’s rendering of Samsung’s Galaxy Z Fold 3 to be unveiled next week / Captured from SamMobile website

Korean tech giant to rethink mobile biz in coming years

By Kim Bo-eun

Samsung Electronics has made a major shift in its smartphone business strategy by focusing more on foldable phones, as it seeks to maintain a competitive edge over rapidly-rising Chinese vendors.

In less than a decade, Chinese smartphone makers have achieved competitiveness with a diverse lineup of models offered at lower prices. This has had Samsung increasing its focus on premium phones with a high average selling price to achieve profitability, rather than increasing market share with lower-end models.

Samsung’s head of mobile communications Roh Tae-moon recently said the tech giant would be “expanding its portfolio of foldables, so this groundbreaking category is more accessible to everyone.” He was referring to Samsung’s strategy of popularizing its premium phones. The world’s top smartphone vendor is set to lower the prices of its latest Z Flip and Z Fold models to be unveiled next week, by up to 20 percent, to materialize this.

While exact prices for the Aug. Unpacked 11 event have yet to be unveiled, a 20 percent cut will still place the models in the lower- to mid-$1,000 range. And so it is questionable whether the still-pricey premium models will be able to attract a larger user base. Samsung said in a conference call on its second-quarter earnings last week that it will focus on expanding sales of foldable phones and boost marketing to achieve this.

Amid Xiaomi rise, Samsung banking on foldable phones

Xiaomi’s Mi 11 Ultra / Courtesy of Xiaomi

China’s smartphone manufacturers are rapidly increasing their share of the global market. For the first time Xiaomi took up the second-largest share of the market with 17 percent in the second quarter, behind Samsung with 19 percent, according to market tracker Canalys. Apple’s share stood at 14 percent, while China’s Oppo and Vivo followed, each with 10 percent.

Xiaomi’s shipments of phones surged 83 percent from the second quarter of 2020, whereas Samsung’s shipments grew 15 percent and Apple just 1 percent. The Chinese firm aims to become the world’s largest smartphone maker by 2023 (in terms of annual shipment volumes). It firm offers a wide range of models, from low-end phones to premium foldables, at much more affordable prices than its rivals.

Xiaomi and other Chinese brands have benefitted in their domestic market from U.S. sanctions on Huawei. But vendors such as Xiaomi are extending their global reach by increasing store presences around the world. Xiaomi has over 1,000 shops in more than 100 countries, and overseas earnings account for almost half of the company’s total earnings.

Apple’s competitiveness may last, given it has a loyal fan base seeking its designs.

But some observers say that it is a matter of time until Samsung smartphones lose their edge, and that it may need to rethink its overall mobile phone strategy in the coming years. Samsung said it will streamline the number of models it releases annually to maximize profitability rather than market expansion.

An industry official said “Samsung will likely be preparing for the next big item after smartphones. The smartphone market will not be the same 10 years from now.”

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