Samsung Electronics Cuts Down the Number of Models Produced by 30% This Year

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Samsung Korea Plant

Towards the end of last year, Samsung Electronics (KRX:005930) announced that it was going to reduce the number of models produced this year. Their aim was to minimize the number of models produced by 25% to 30%. As of December 2015, Samsung Electronics (KRX:005930) has produced 36 devices, Android devices to be precise. In 2014, the company released 54 models. Samsung has achieved its goal and even bypassed it since they have reduced the models produced by 33% from last year.

However, it seems to have created no difference. Samsung devices seem to be still very many in the market. The Samsung models out there in the market are too many. This year it has fed the market with their Prime, Grand, Plus, and Max. Their S series has also grown and a J series was launched. In other words, 36 and 54 have not created much of a difference. But before we judge them, it is important to remember that the decision was not made to join the league of big mobile makers. The decision to slash the number of models made was a financial-driven decision.

The company’s phone department has registered reduction in sales since 2013. The sales have reduced in percentage; the average of this department is below 10% currently. The new year resolution to cut down on the number of models produced and increasing the sharing of components between devices was an effort to reduce capital invested in the phone division.

Flagship devices are very important. Flagship devices are the devices that manufacturers produce that are a representation of the best they can release to the market. Such phones are usually very expensive; most people feel they are not worth the money. These devices are sold on margin basis rather than volume basis. These phones are often the topic of most technology conversation online and offline.

Since 2010, when Samsung introduced their first flagship device, the company has produced an average of 2 devices each year. But for this year, 2015, the company has released four flagship devices. Rumors have it that they will produce six flagship devices next year. This increment in flagship devices is responsible for the feeling that Samsung has not slashed the number of devices produced.

Critics and technology analysts feel that Samsung gives consumers too much choice. It is good to give consumers a wide range of high-end phones to choose. The smartphone market has become more diverse as consumers have different preferences when it comes to size and form factor. With Samsung, you need to choose between a regular smartphone and a phablet. You will then need to make a choice between flat body styles or curved.

Four devices demanding the talks and conversations meant for one device is too much. Either way, we have to prepare for next year since there is no sign this is going to change; in fact, we should be ready for more.