Samsung expecting massive quarterly profits drop

The world’s largest TV and mobile phones manufacturer Samsung has forecast a 37.4 per cent fall in quarterly operating profit from the same period last year.

In its pre-earnings guidance, the firm forecast an operating profit of 5.2tn Korean won ($4.74bn; £3.14bn) for the three months to December.

However, the company has been struggling to retain market share, as people seem to be turning to cheaper phones.

That’s especially visible in China, the world’s largest smartphone market, where the Galaxy has been steadily losing ground.

Analysts agree that the smartphone market in China has become more intense than ever before.

"Xiaomi has proven to be very, very successful and is number one in China already," Frost & Sullivan's Andrew Milroy told the BBC.

"More than that, the firm has come from nothing in the last couple of years, so Samsung has to start being more competitive."

The biggest problem, as Milroy puts it, is that Samsung hasn’t been very creative lately.

"It's not come out with anything spectacularly innovative recently," he said.

"Its new models are basically an improvement of existing products, but they pride themselves on being innovative, so they really have to start focusing on that to stay in the game."

As of October 2014, the Chinese smartphone manufacturer Xiaomi became the world’s third biggest smartphone maker, according to research by IDC.

Update: Upstream CEO Marco Veremis has offered his thoughts on Samsungs struggles: “The battle is certainly not lost for Samsung. There is still an appetite for these top of the line devices in China, as research we conducted with Ovum reveals Samsung is the second most recognised Western brand in China and 32 per cent of consumers aspire to make their next device a Samsung product.

"However, 85 per cent of Chinese consumers choose mobile content predominantly because it is familiar and easy to understand, something many global companies often struggle with and comes much more naturally to local brands.

"One route to success is already being used by Apple in China, that being to team up with a local operator to provide localised content that better resounds with Chinese consumers and potentially see an uptick in performance in 2015.”