Samsung's second quarter earnings showed the slowest quarterly profit growth in more than a year, partly because of sluggish smartphone sales. Revenue from the mobile division was down 22 percent year-on-year in the three months to June, which Samsung attributed to "lower-than-expected sales of the Galaxy S9," the company's flagship smartphone.
The firm is hoping the recently-released $1,000 Note 9 smartphone could help revive sales, but its facing the reality of a slowing market for handsets and increased competition. Global smartphone shipments declined 1.8 percent year-on-year in the second quarter, according to data from IDC. And for the first time, Huawei became the second-largest smartphone player by shipments, surpassing Apple and closing in on Samsung's crown.
And Samsung is facing stiff competition in the crucial, large markets of India and China. Huawei is the biggest player in China, followed by Oppo, Vivo and Xiaomi, all of which are domestic companies. Samsung, which several years ago featured in the top five handset makers in the country, has lost much of its share.
In India, Samsung, which was again very dominant in the past, is facing increased competition from Xiaomi, which is now equal to its South Korean rival in terms of shipments, according to research firm Canalys.
Neil Shah, research director at Counterpoint Research, said Samsung has lost share in the major markets of China, Europe and the U.S., where it can command higher-than-average selling prices of phones. This has had a knock-on effect to its lower-priced models that it sells in countries like India and China.
"The premium S9 did not work well in those markets. So now the only market they can sell premium S9 in quantity is Korea, which is a very small market. The bulk of the issue is compounded because of softer premiums. If your halo device isn't doing well it boils down to cheaper devices as well, because you lose the halo effect from the flagship," Shah told CNBC by phone Monday.