iPad Blamed for Decline in Samsung Profits

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Samsung is warning that its profits for the first quarter of 2011 will be substantially lower compared to previous quarters, and analysts are blaming the drop on Apple and its popular iPad multimedia tablet.

iPad tromps Galaxy Tab!Apple’s iPad is eating the Galaxy Tab’s lunch

The company apparently wasn’t able to compete well against the iPad with its Galaxy Tab tablet device thanks to “severe price competition,” according to Dongbu Securities analyst Lee Min-hee. Samsung also had to deal with weaker prices for its liquid crystal display component sales, according to the Associated Press.

Samsung didn’t specifically target the iPad with its warning. Company spokesperson Nam Ki-yung did, however, say Samsung would offer additional details about its profit decline during its earnings report scheduled for the end of April.

Samsung isn’t the only company dealing with pressure in the tablet market thanks to Apple. The iPad was already the dominant player in the tablet market before the iPad 2 was released in March. With the second generation version of the iPad available, companies have been scrambling to match features and to cope with Apple’s agressive pricing.

Based on the demand for the iPad 2, Samsung and other tablet makers can expect to continue having trouble keeping up with Apple in the tablet market.

Comments

Heath

I think it’s humorous when companies deny their own strategic and tactical failures for their bleak profits. When a company blames external forces for their failures and attributes success to themselves it screams, “We don’t understand this business!” That’s what Samsung is saying, blaming the iPad. To be fair, Apple used to share this attitude.

However, if the opposite is true… if a company blames themselves for their failures and attributes external forces to their success, they’ve positioned themselves to take responsibility, face the brutal facts, and fix what’s broken. When Steve Jobs returned to Apple in 1996 he brought this spirit with him. Fifteen years later the results speak for themselves. Leadership grounded in reality is so important.

Blad_Rnr

@Heath

Well said.

Montresor

Agreed, this “explanation” from Samsung really rubs me the wrong way. There seems to be a subtext here: “If Apple didn’t produce a great product and then sold it at an aggressive price, our potential customers would have had to settle for our mediocre and overpriced offering. Curse you, Apple!” There’s a real feeling of disrespect for customers in that, a view that the buyer is best viewed as a cash reservoir and not an individual to be courted with the best you can offer.

jfbiii

Leadership grounded in reality is so important.

Ironic that the positive result is blamed on a reality distortion field.

bmovie

Being a major supplier of chips, screens and other components to the iPad (both 1 and 2), Samsung should not be reporting a down quarter. That is, unless selling the Tab is “biting the hand that feeds you.”

For Samsung to sell “Tabs” would mean that all components were created with Apple. To say that components were created by Apple and simply manufactured by Samsung would be theft of intellectual property and invite lawsuits. Give Samsung credit for being more than just a “pair of hands”.

Lee Dronick

Being a major supplier of chips, screens and other components to the iPad (both 1 and 2), Samsung should not be reporting a down quarter.

Is the Samsung that sells components the same song sung as the one that sells finished products? I am thinking that that while they share names that they are organized as distinct businesses.

mhikl

To be fair, Apple used to share this attitude.

Lies, lies, nothing but lies. With my photographic memory I know this ain’t true! (at least not before 1982, April sometime.) But, Heath, Bosco just emailed me and said your are spot on so it must be true. Damn.

But behind the story is the fact that if Apple was not selling these crazy fangled things, no one would cause the market wouldn’t have been invented yet.

Is the Samsung that sells components the same song sung as the one that sells finished products?

There’s a tidy song to those lyrics Sir Henry.

But I do like SS’s honesty. Refreshing, really.

Gareth Harris

I think that Samsung is making enough off component sales to Apple to ease their wounds.

Steve Webb

But I do like SS?s honesty. Refreshing, really.

SS’s honesty? Would that be when they initially claimed that Tab sell-out was “quite slow”; or when they retracted that claim and said sell-out was “quite smooth”?

positive result is blamed on a reality distortion field.

You got that backwards. When Steve Jobs referred to “quite slow” during the iPad 2 introduction, critics claimed that was the “reality distortion field” at work, because the truth was “quite smooth”.

I guess “slow” = “smooth”, and stopped = tranquil.

Instead of Blaming the iPad2, they should be blaming the 2 million unsold Tabs (Unsold = “sell-in” - “sell-out”).

jameskatt

The iPad is not to blame.

Samsung’s primary businesses are not competing against the iPad.

In fact, if anything, one of Samsung’s businesses is in providing components for Apple.  For this, it gets a lot of money.  And thus, Samsung is profiting from the iPad in spades.

Thus, it is one of Samsung’s other businesses to blame for Samsung’s loss of profitability.

For example, Samsung’s Washer and Dryer business may be losing money because of the economy.  Maybe their Refrigerators aren’t selling well because of the economy.  Maybe their Dishwashers and Ranges and Microwave ovens aren’t selling well because of the economy.

Don’t blame everything on the iPad.  If anything, Samsung’s tablet business is only a hobby - trying to ride the coattails of Apple.  It is NOT a core Samsung business.

Lee Dronick

Thus, it is one of Samsung?s other businesses to blame for Samsung?s loss of profitability.

For example, Samsung?s Washer and Dryer business may be losing money because of the economy.? Maybe their Refrigerators aren?t selling well because of the economy.? Maybe their Dishwashers and Ranges and Microwave ovens aren?t selling well because of the economy.

I did some research and found on their website:

“Samsung is comprised of companies that are setting new standards in a wide range of businesses, from consumer electronics to petrochemicals, from advertising to life insurance. They share a commitment to creating innovative, high quality products that are relied on every day by millions of people and businesses around the world.”

This makes think that their tablet business is separate from other Samsung named businesses. Check out their corporate website from the link i provided, they are into a lot things including insurance, hotels, and chemicals.

Sidebar: I have a Samsung refrigerator and it is rather Mac like for a kitchen appliance. Two compressors, one for the chill side and one for the freezer. Digital temperature readout and control panel on the outside. Numerous lamps on the inside. I would buy another one.

But getting back you comment. I would bet that the economy is affecting the other Samsung companies.

Junior

Uh, why are you saying that Samsung is blaming Apple? The only people blaming Apple are the analysts. Samsung takes responsibility for their loss of profits, as they are after all accountable to their shareholders like any other company, and if competition is responsible for reducing their profits, what’s wrong with pointing that out? Competition benefits the consumer. There’s no need to start beating your chest about it.

Lee Dronick

Uh, why are you saying that Samsung is blaming Apple? The only people blaming Apple are the analysts

“Samsung didn?t specifically target the iPad with its warning. Company spokesperson Nam Ki-yung did, however, say Samsung would offer additional details about its profit decline during its earnings report scheduled for the end of April.”

We should find out at the end of the month.

mhikl

SS?s honesty? Would that be when they initially claimed that Tab sell-out was ?quite slow?; or when they retracted that claim and said sell-out was ?quite smooth??

Steve, you are correct. However, we all suffer from distorted reality to a degree and either by leaving out bits of info or by choice or by limitation of space, words can get distort. Life is confusing when wiggle room comes into play.
However, Samsung seems to me to try to be honest more often than comparable others. It may be more a sense that in their exuberance, they err but then SS will come back and admit its error. I don’t see this from many other players. But, again, you are correct that like all the others, if honesty gets you to heaven, we won’t be seeing SS sunning itself out on those beaches, either.

And Sir Henry. Very good points on SS research. I would never have thought to look.

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