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Samsung to cut S4 production and retire the S3 Featured

Samsung may be winning the smartphone wars, but global demand is down and it is cutting production of its flagship S4.

According to Gartner, Samsung now has 31% of the worldwide global smartphone market. Once dominant Apple has declined to 18%. The other half of the market is accounted for by a dozen or more players.

But the pie is not getting much bigger. Global mobile phone sales in the first quarter of 2013 were stagnant. Worldwide mobile phone sales to end users totalled nearly 426 million units in the first quarter of 2013, a miniscule increase of 0.7% from the same period last year, according to market analyst group Gartner.

Smartphone sale are up, according to Gartner, Worldwide smartphone sales totalled 210 million units in the first quarter of 2013, nearly half the total for all mobile phones. This is up 42.9% from the first quarter of 2012, but the rate of growth has declined.

The reduced growth in the market has led Samsung to cut back on the production of its S4 smartphone, according to a report in Korean trade journal ET News. Quoting unnamed ‘industry sources”, the report said that Samsung ordered only enough parts for 6.5 million units in July, much less than the number ordered in June (11.5 million) and May (10 million).

That does not mean sales will fall be a similar figure, as Samsung and its suppliers have a large stock of parts. But the ET News reports said that the cutbacks will likely lead to a reduction of 10% to 15% in S4 production. The report also said that the Galaxy S3 will be retired earlier than expected, and that Samsung will concentrate on the S4, including new S4 Zoom and S4 Mini models.

The reports follow a significant drop in Samsung’s share price earlier this month after analyst group JP Morgan issues a negative report on Samsung’s profitability, revising its predicted earnings nearly 10% lower for this year. JP Morgan says this is largely because of lower than predicted S4 sales.

Nevertheless, Samsung’s shipment figures are the envy of other phone manufacturers. It shipped just over 100 million units in the first quarter of 2013. Second was Nokia (most of them low end feature phones) with 63 million, followed by Apple with 38 million, all of them iPhones. There is then a big drop to LG, ZTE, Huawei, TCL and Sony, none of whom have more than 4% market share.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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