Burnt by Note 7 fiasco, Samsung focuses on semi-premium phones, e-sales

With no high-end models after the Note 7 debacle, Korean chaebol Samsung, known for its super-premium phones in the Rs 45,000-plus bracket, is counting on its semi-premium range to improve sales. By semi-premium, the reference here is to phones in the Rs 25,000-35,000 bracket. At the same time, the country’s largest smartphone maker is also eyeing numero uno position in the online space, where it lags peers Xiaomi and Lenovo at No. 3. 

On Monday, March 6, Samsung will launch a new phone in India in the Rs 25,000-30,000 bracket. This will be the second launch in a week in this range. Last week, the Korean major relaunched a six-month-old model A9Pro at a new price-point of Rs 29,900. It was earlier available for Rs 32,490. Interestingly, this phone will be available only online now as against offline earlier, lending credence, say experts, to Samsung’s online bent. The company’s other online-only phones are bunched under a series called ‘On’, which are models priced under Rs 20,000 a unit.

 

While online constitutes a quarter of overall smartphone sales in India, it still is an important channel, say experts.

Most Chinese brands, which have populated the Indian market in recent years, have made a mark pushing their phones online, analysts said.

In February, Samsung came out with a new series called the C series, targeting the Rs 35,000-36,000 bracket. The strategy, say experts, is clear — be aspirational, but yet affordable to consumers. “As the leader, our focus is on all segments of the market,” says Manu Sharma, vice-president (mobile business), Samsung India. “We have feature phones costing Rs 1,200 a unit, going right up to those that cost Rs 55,000 apiece in our portfolio,” he says.

But sector analysts say that Samsung has been hit hard in recent quarters by brands such as Vivo, Oppo, Gionee, HTC and One Plus in the Rs 25,000-30,000 bracket, as the Korean major focused its attention on the super-premium end of the market in its drive to take on Apple.

In many respects, the Note 7 issue, where a series of battery explosions compelled the company to eventually recall the phablet last year, has acted as a reality check, say experts. They say it has pushed the company to focus not only on premium flagship models, but also phones lower down the pecking order.

“The Rs 25,000-35,000 price range has become a key focus area for Samsung in recent months since brands such as Vivo and Oppo have done well there,” says Tarun Pathak, senior analyst, Counterpoint Research. “Besides the super-premium end, the only other segment that can give players good margins is the semi-premium market since price realisations are fairly good,” Pathak says. So brands, he says, can maintain equity without having to compromise too much on price.

Faisal Kawoosa, lead analyst, CyberMedia Research, says: “Samsung seems to be testing the waters with slightly lower-priced offers. This is critical, as it has ceded ground to Apple in the absence of a super-premium phone in recent months. This should help it fill the gap for now.”

Company executives argue that its super-premium segment is not unrepresented with the S7 Edge, a one-year-old model still doing well in the marketplace. This phone, for the record, was adjudged the best phone of 2016 at the recently-concluded Mobile World Congress in Barcelona.

But, say experts, in the fickle world of smartphones, where consumers have no brand loyalties, one year is too long a time to keep interest levels going. While the S8, Samsung’s latest in the S series is slated for a global launch on March 29, it will hit the Indian shores only in the second or third week of April.