As the global economy reels, it’s no surprise smartphone demand is down. Spending $1,000 on a phone isn’t nearly as appealing with a potential recession looming. Earlier in the month, IDC projected that smartphone shipments would decline by 3.5% in 2022. Samsung seems to be feeling the effects of this slowdown as much as any phone maker, as a new report claims the company has millions of unsold phones in stock.
Samsung struggling to unload new phones
The Elec reports (via SamMobile) that distributors have 50 million Samsung phones currently sitting in their inventory. The mid-range Galaxy A series is said to make up “a huge portion” of this unsold supply. Sources tell the site that Samsung wants to ship 270 million phones in 2022, but the 50 million unsold phones represent 18% of that sales goal.
According to The Elec, unsold inventory usually represents about 10% of any company’s total shipments. The fact that Samsung’s is so much higher shows just how significantly the South Korean tech giant overestimated sales in the first half of the year.
The report goes on to note that Samsung was producing around 20 million phones a month in January and February. That number dropped to 10 million in May, presumably in response to inventory growing while demand was dropping.
We can’t verify this report, but it isn’t the first to spell trouble for Samsung this spring. Last month, South Korea’s Maeil Economic Daily reported that Samsung was slashing smartphone orders for 2022. A source said that Samsung was lowering its order volume from 310 million units to 280 million units — nearly 10% fewer than planned.
Apple isn’t immune to low demand either
iPhone SE 3 color options. Image source: Apple Inc. Of course, Samsung isn’t the only smartphone maker lowering expectations due to inflation, supply chain disruptions, and the Russia-Ukraine war.
In March, Nikkei Asia reported that Apple would make 20% fewer iPhone SE units in the next quarter than planned. Respected analyst Ming-Chi Kuo said that production issues were not to blame, but rather demand was simply lower than expected.
Samsung and Apple each have major phone launches planned for the second half of 2022. According to Front Page Tech host Jon Prosser, Samsung will announce the Galaxy Z Fold 4 and Galaxy Z Flip 4 on August 10th. A month later, we expect Apple to host an event of its own to pull back the curtain on the highly-anticipated iPhone 14 line.
Both companies are certainly hoping that the economy is in better shape later this summer. Otherwise, we might see unsold inventory continue to grow.
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Reports said in mid-February that the Galaxy S22 series hit record sales in Korea during preorders. The phone outsold the Galaxy S8, the last phone to top 1 million units during preorders. Just over a month later, Samsung is reportedly ready to offer big Galaxy S22 price cuts in the country.
Apparently, the Galaxy S22 throttling controversy impacted sales in the region. As a result, Samsung and carriers have decided to offer significant subsidies to buyers looking for one of the three new models.
Don't Miss: Monday deals: AirPods, Apple Watch, kids toys, star projector, more What is the Galaxy S22 throttling issue?
Soon after buyers got their hands on the preordered Galaxy S22 units, they discovered that a service installed on the handsets would throttle performance. The Game Optimizing Service (GOS) is an app found on various other Galaxy devices. It’s supposed to prevent overheating and preserve battery life. But users who discovered the issue also found that Samsung was cheating in benchmark apps.
Some speculated that problems with the Galaxy S22 processor or cooling system might have led to the throttling behavior that customers observed soon after buying the phone. Some went even further, saying that Samsung looked for price cuts on Galaxy S22 components. Samsung’s need to save money isn’t necessarily surprising. After all, the Galaxy S22 phones have the same starting price as last year’s models.
Samsung needed about a week to release an update in Korea. A few days later, the GOS fix was in place in Europe. But then we discovered the throttling issue was a bigger scandal than we thought. Samsung had to apologize to shareholders for the Galaxy S22 performance issues. The company also noted that the GOS throttling wasn’t the result of cost-reduction policies.
Samsung Galaxy S22 Ultra in white, with stylus. Image source: Samsung The Galaxy S22 price cuts
A report from The Korea Times mentioned the Galaxy S22 price cuts in relation to the throttling scandal. Samsung hasn’t outright reduced the starting prices for the three Galaxy S22 flavors. Instead, it’s local carriers that are offering significantly higher subsidies than before.
KT and LG Uplus are two local operators that increased the Galaxy S22 and Galaxy S22 Plus subsidies by up to 500,000 won ($410). They went to 500,000 in subsidies for the Galaxy S22 Ultra last month. Users still have to subscribe to cellular plans of over 85,000 won ($70) per month to take advantage of the higher Galaxy S22 price cuts.
The subsidies and minimum monthly fee might vary from carrier to carrier. But the report notes that the subsidies have more than tripled from the previous 150,000 won ($123) discounts that carriers offered initially.
“The amount of subsidies that will be provided is something that our company and mobile carriers decided together after a consultation,” a Samsung spokesman told the site. The person also said that the entire market is in a difficult situation, and the increased subsidies were put in place on April 1st.
Discounts on new Android phones aren’t surprising
It’s normal for the latest Galaxy S phone to lose value quickly after the first months of sales. That’s why we told you not to buy the Galaxy S20 a couple of years ago when Samsung’s pricing structure started at $999. The $799 Galaxy S22 seemed like a great deal during preorders before the GOS scandal.
But it quickly became clear that it might be a good idea to avoid the Galaxy S22 for the time being. Even when it gets a price cut.
Samsung has not confirmed that the GOS controversy forced it to cut the Galaxy S22’s price in its home market. But the discounts are in place in the region. This indicates that Samsung felt the need to offer bigger incentives to buyers following the performance scandal.
It’s unclear whether Samsung will adopt similar strategies in other markets. Again, you can’t save up to $410 on the Galaxy S22 in Korea by paying full price for the handset. You have to agree to a new contract with your carrier to get the savings. But if you haven’t purchased the Galaxy S22 of your dreams, it might be a good idea to wait a while longer for a much better deal.
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South Korea-based Samsung has just begun domestic sales of high-end televisions with a smart interface powered by its own Tizen operating system.
It is part of a wider push by the consumer electronics firm to incorporate the software in a wide range of its home products - everything from fridges and washing machines to robotic vacuum cleaners.
As well as making its devices less dependent on rival systems like Google Android, Samsung believes Tizen OS will allow more seamless communication between its own devices.
Previously Samsung's smart TV interfaces have been criticised as being slow and delivering a poor user experience.
So - how effectively does Tizen address these issues? The BBC's North America Technology Correspondent Richard Taylor got a rundown of some of its features.