With Note 4 Release Date Pending, Samsung Needs Truly Innovative Product

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Just when you thought Samsung and its giant smartphone market-share lead were an indestructible force comes news that not all is rosy at the Korean device manufacturer.

Samsung this week reported that revenue and profit fell last quarter, thanks in big part to a declining demand for tablet PCs. Why you ask? It turns out that those large-screen smartphones – often referred to as “phablets” – are eating away at the tablet market.

Samsung’s second-quarter revenue was US $51.4 billion and profit was $7.1 billion, both down from the previous quarter and the year-ago quarter. In addition to the aforementioned “cannibalizing” is a stronger Korean won versus other currencies – that’s contributing to the disappointing results. It’s also a seasonally slow period for sales in China, a very popular market for Samsung devices.

“The expected release of the Galaxy Note 4 in the third quarter (most likely at the IFA in Berlin) will bump up the numbers,” noted Boris Metodiev, senior analyst with Yankee Group, commenting specifically on a Re/code article, “but phablets are cannibalizing the sales of small screen tablets and are one of the reasons for the decreased tablet demand that Samsung is complaining about. All in all, unless the company comes up with a truly innovative product, the disappointing financial results will continue into subsequent quarters.”

Samsung isn’t the only vendor accused of a lack of innovation in recent years. Apple, for one, has been in the crosshairs of those who think there should be a major innovation in the industry every few months. Bendable devices, if they come to fruition, might be Samsung’s breakthrough.

Follow senior online managing editor @Craig_Galbraith on Twitter.

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