Samsung’s Smartphone Crown Slipping

It was more bad news for Samsung Electronics Co. Thursday as the worldwide smartphone leader posted a big drop in quarterly mobile earnings. The earnings report came the day after rival Apple Inc. reported the biggest profit in corporate history.

The South Korea-based electronics giant reported that year-to-year earnings from smartphones and other mobile gadgets had dropped 64 percent to $1.80 billion in the fourth quarter of 2014, contributing to the companyEUs first annual earnings drop in three years.

SamsungEUs mobile division endured its fifth consecutive quarter of decline. The mobile unit's share of Samsung's operating profit fell from almost 70 percent in 2013 to about 58 percent last year. ThatEUs in sharp contrast to Apple's record-breaking 74.5 million iPhone sales in the yearEUs final quarter thanks to the success of its big-screen iPhone 6 and 6 Plus.

While Samsung did not release its smartphone sales figures, it said shipments in its smartphone and tablet categories were down in the quarter.

New Reality?

Samsung is slowly getting squeezed out by popular competitors from the high end and the low end in the form of Apple and Xiaomi, respectively. Last year in the second quarter, Xiaomi passed Samsung to become the biggest smartphone vendor in China.

However, the company said it expected shipments and average selling prices for handsets to pick up in the first quarter following the launch of new mid-tier models like the Galaxy A.

We reached out to Patrick Moorhead, founder and principal analyst at Moor Insights & Strategy, who suggested that perhaps Samsung has its work cut out for it when it comes to regaining its footing in the phone market.

"Samsung appears to be in a free fall in phones," he said. "They have to do a better job aligning their technological capabilities, what consumers are asking for and new innovations that they can...

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