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Samsung mulls price drop on Galaxy S6

Cape Town - Prices for the Samsung Galaxy S6 and S6 Edge could soon be reduced as the South Korean electronics company looks to build momentum in sales.

Samsung has reported disappointing results for its mobile devices division, despite the hype of the curved Galaxy S6.

"Despite the launch of Galaxy S6, improvement to earnings was quite marginal due to low smartphone shipments and an increase in marketing expenses for new product launches," the company said in a recent financial report.

Profit at Samsung Electronics also fell 8% as the company struggled with soft demand for the S6 and production delays for the S6 Edge.

Samsung indicated that in order to boost sales for the gadgets, it would pursue a price adjustment strategy as well as the introduction of new phones, ostensibly in the lower priced "A" range.

"While the IT & Mobile Communications (IM) Division is expected to face a difficult business environment, the sales momentum for high-end products will be maintained by adjusting the price of the Galaxy S6 and S6 edge and introducing new premium smartphone models.

Apple strategy

"New middle- and low-end models will also be introduced, and the IM Division will continue to work on improving efficiency of expenditures," Samsung said.

Samsung makes less profit per device than rival Apple. (Duncan Alfreds, Fin24)

Price reductions could well further hurt Samsung which makes less profit per device sold than key rival Apple.

According to IHS Technology, consumers pay more for Apple devices with fewer features than similar Samsung smartphones.

The organisation found that the main reason Apple can charge more for its iPhone lies in the tight integration with the ecosystem of services and products.

While the 64GB S6 costs $290.45 to produce, that cost doesn't take into consideration associated marketing and distribution expenses. IHS also suggested that Apple had tighter rein on its production costs as it is able to produce 121 iPhones versus 100 for similar Samsung phones.

Samsung is also responding to the challenge posed by lower priced manufacturers such as Xiaomi, Lenovo and Huawei by launched mid tier smartphones such as the A series which is intended to battle rivals in that market segment.

While Samsung begins the process of lowering prices internationally, it is unclear how the policy will roll out in SA.

Despite efforts, Samsung SA was unavailable for comment, though in SA, price is usually determined by operators and retailers rather than directly by manufacturers.


- Follow Duncan on Twitter

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