Samsung to Cut Number of Smartphone Models for 2015 to Reduce Cost

Samsung announced that it would be cutting its number of smartphone models by 25 to 30 percent for 2015 to reduce costs.

Head of investor relations Robert Yi made the announcement in New York and it was confirmed by a spokesperson on Tuesday, the Wall Street Journal reports.

Samsung had to cut some of its models, though it hasn't yet specified which ones, to reduce its costs after suffering from a 49 percent drop in its third-quarter earnings. It will also allow the company to organize its inventory and supplies.

According to market research analyst IDC, Samsung is still the leading smartphone brand worldwide but its shipments continue to decline year after year. Analysts predicted that it won't be long before Chinese competitors Xiaomi and Lenovo catch up as both continue to increase their shipment volume.

Samsung officials promised to focus on reducing operating costs, and one of its strategies is dropping some of the smartphone models next year to focus on the production of competitive models. The company is struggling to maintain a double-digit percentage margin for its operating profit which closed at 7 percent for the end of the third quarter.

"In 2015, we will lower the number of smartphone models by one-fourth to one-third compared with this year," Yi said. "[This] would allow us a chance to lower the prices of [remaining models] through mass production."

Analysts forecasted that Samsung will attempt to balance the specifications and pricing of its low-to-mid-end models to recover its market share.

"It is time for the company to make choices and focus on a few competitive models to compete better with Chinese rivals that can offer similar products at significantly lower prices," Nomura analyst Chung Chang-won told the Financial Times. "Its margins will be squeezed further as the company tries to cut prices while improving specs."

Tags
Samsung, Smartphones
Real Time Analytics