Samsung appears to have some concerns about the impact Apple's new iPhone 8 might have on its bottom line.
The company on Thursday (July 27) announced record earnings due in part to the success of its Galaxy S8 smartphone, but also because of the growth in its component business. However, there appears to be trouble on the horizon.
Although Samsung anticipates a heavy third quarter for smartphone purchases, the company cited unidentified competitors as potential problems for its business.
“In the second half, demand for smartphones and tablets is forecast to increase as the market enters a period of strong seasonality,” Samsung said in a statement obtained by BGR. “However, competition is expected to intensify as new smartphone models are released by competitors.”
Samsung went on to say that it plans to respond to that competition by launching its Galaxy Note 8 at a press event on August 23. Still, it won't be enough to fix a fundamental problem.
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“Looking into the third quarter, revenue and profit are expected to decline QoQ due to increased marketing expenses associated with the launch of the new Galaxy Note and the reduced launching effect of the Galaxy S8 and S8+,” Samsung said.
"Samsung launches phones twice a year, but its mainstream flagship Galaxy S line comes out in the spring, so by the fourth quarter the launch buzz has diminished." said Avi Greengart, research director at GlobalData.
Samsung's comments come amid reports that Apple is planning to announce its iPhone 8 in September. While there's a good chance that Apple's handset won't hit store shelves until later in the year, two other iPhones, the iPhone 7s and iPhone 7s Plus, are expected to make their debut sooner.
There's another factor to consider: Samsung's component business. "Samsung makes most of its profits from selling components, often to its phone competitors, and component sales naturally occur before the phones they are built into," said Greengart. "So Samsung's massive profits this past quarter may already reflect some of the heightened competitive environment it expects to see in the fall."
Ultimately, the iPhone is a problem not only for Samsung but for all competitors. Speculation and excitement surrounding new iPhones is running rampant, effectively throttling competing handsets hoping to attract customers who are waiting to see what Apple has planned.
Not even Samsung, the world's largest mobile phone maker, can overcome that challenge. So, the company is seemingly preparing the market for that eventuality.
