Apple’s new contract with China Mobile and the release of iPhones with larger screens could hit Samsung’s sales.
Samsung is the king of the Android hardware world, but analysts predict that 2014 will be a slow year for the company as rival Apple enters the Chinese smartphone market.
According to a new report from Reuters, analysts forecast that Samsung’s mobile devices business will either grow by a single digit or to “shrink mildly” in 2014. This is considerably slow after the company managed to grow by eight times over the past five years, according to Thomson Reuters’ Starmine SmartEstimate.
One reason for the prediction is Apple’s entry into the Chinese smartphone market. The iPhone maker just scored a deal with China’s largest mobile carrier — China Mobile Ltd — late last month, which opens the iPhone up to 760 million China Mobile customers starting January 17, 2014.
While the iPhone 5C and 5S are much more expensive than many Android-powered phones, it’s seen as a status symbol in China that many would likely be interested in buying — meaning that it will boost competition in the high-end phone arena.
Aside from that, Apple is expected to start selling phones with larger screens this year, which is one feature typically dominated by Samsung’s Android-powered phones. With Apple entering the market and offering similar features, it poses a real problem for Samsung’s mobile business.
Thomson Reuters’ Starmine SmartEstimate added that Samsung’s fourth quarter business was likely hit by Apple’s strong iPhone sales, and that this is expected to continue through the end of the first quarter of this year. Starmine predicts that Samsung’s October-December earnings will show an operating profit growth of 10 percent at 9.75 trillion won ($9.24 billion USD), which is a 4 percent drop from the 10.2 trillion won in the July-September period. Analysts attribute this to Apple’s strong holiday sales.
Further, BNP Paribas estimates that Apple’s China entry and larger screens could reduce sales of Samsung’s latest Galaxy S and Note series by 3 percent in 2014.
But this hardly means Apple is going to march into China and take over. Samsung has been selling its phones through China Mobile for 7 years, and is the country’s largest vendor with 70 million units shipped last year, which accounts for 20 percent of its total shipments.
To top it off, technology research and advisory firm Gartner just predicted that devices running Google’s Android mobile operating system will achieve 1.1 billion shipments in 2014 — and Samsung sells the most Android phones out of any other hardware maker. This represents a 26 percent boost from 2013’s total.