After the Note7 failed, it seemed that Samsung Electronics recovered just fine, it even posted a higher operating profit for 2016 than the year before. However, analysts at Hana Financial Investment found that the real damage is buried in the details.
Overall profits may have gone up, but profits from high-end devices - Galaxy S and Note - fell to their lowest levels yet, 29%. It’s the first time this number has been below 30% - for comparison, they were below 40% in 2015. To be fair, the decline started long before the Note7.
Profits from flagships were at their peak - a whopping 75% - back in the second quarter of 2013 when the Galaxy S4 was selling like hotcakes. Since then, the mid-rangers and entry level phones have contributed more and more of the profits and now out-earn the top dogs 2:1.
This goes to show how important it is for everything to go right with the Galaxy S8 lau nch (this Wednesday) and the Galaxy Note8 after that. But it also shows that Samsung’s mid-range and low-end are hot sellers - the A, C and J series shouldn’t be overlooked.
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