Samsung Cuts 10,000 Jobs : TechPinas Explains What Went Wrong in the Korean Company's Smartphone Business

As of writing, Korean electronics giant Samsung is preparing to axe 10,000 workers at its headquarters -- particularly in human resources, finance, and public relations departments.

This follows a $44 Billion USD decrease in the company's total valuation and a $5 Billion USD fall in its sales revenues from 2014 to 2015. Recently, Samsung also adjusted the prices of its Galaxy S6 and S6 Edge phones to somehow increase consumers' interest in those two flagship releases.

Samsung Logo

All these would lead anyone who's been following the development of the global handset market to ask: What exactly went wrong for Samsung? How can the world's most prolific smartphone seller suddenly experience this sudden decline?

As a tech blogger who's seen and covered Samsung's phenomenal rise and swift fall within the past five years, allow me to share what I think is the answer to those questions:

Based on price, smartphones fall under three basic categories - entry level, midrange (or mid-level), and high-end (often referred to in blogs and tech sites as 'flagship level').

Following Nokia's decision to adopt Microsoft's Windows Phone OS (which, until now, has yet to fully take off), Samsung quickly got hold and dominated the entry level and midrange echelons with best-selling, competitively-priced Android phones such as the Galaxy Y, Grand, and Galaxy Mega phablet series among other models. From 2010 to 2013, it was an easy win for Samsung as other players in the handset game were still struggling to create their own Android phones that can get the interest of consumers. Samsung, in many ways, became a trailblazer during those years -- dictating the design and even the interface of competing products. And all that translated to sales, catapulting the Korean brand to the top position in those price categories.

In the flagship echelon, Samsung had but one nemesis: Apple. But from 2010 to 2013, the "twin" high-end Galaxy S and Galaxy Note annual releases were able to get a considerable portion of the pie by taking advantage of the main weakness or point-for-improvement of the Cupertino-company's priced handset: The iPhone - in those years - was small, too small for such an expensive device. Samsung Galaxy S, S2, S3, S4, and Note 2 - with total 356 million unit sold - were all considerably bigger than the diminutive 4-inch iPhone, which greatly contributed to their success. And one can also argue the Galaxy models' microSD card expansion slot - that, to this day, is still absent on the iPhone - made them more enticing to consumers.

Fast forward to 2014 and 2015, entry-level and midrange smartphone makers from China and India have found a way to duplicate - if not altogether surpass - many of the great features that made Galaxy handsets in those price categories successful. And what made matters worse for Samsung is that these OEMs tend to price their products much more competitively.

While Samsung frantically tried to limit its vast number of affordable handset models to improve 'focus' instead of coming up with new and innovative selling points to put their phones on a clear level above their Android copycats, various local brands in many of Samsung's key sales territories including the Philippines - that get their phones in bulk from these Chinese and Indian companies - all worked together to slowly but surely dislodge the Korean Giant from the top spot.

How about the flagship-level? Well, last year, Apple finally addressed the request of their fans across the world by releasing not just one but two iPhones that have far bigger screens. And it proved to be an amazing decision, yielding great results. The 4.7-inch Apple iPhone 6 and the 5.5-inch Apple iPhone 6 Plus became the American company's best-selling iPhone models ever with combined sales of 169.2 Million units -- and counting! In contrast, Samsung Galaxy S5 - the Korean Giant's 2014 flagship release - became the least successful Galaxy S model during its time with only 11 million units sold. The SGS5 was also heavily criticized by tech bloggers and writers for having an uninspiring 'band-aid' design and for not having enough compelling new features compared to its predecessors. (All sales figures in this post are based on what these companies have formally shared with various media outlets.)

Samsung has yet to officially disclose the exact sales figures of this year's dual flagship handsets, Galaxy S6 and S6 Edge - both flaunting an opulent real metal frame albeit lacking two features that greatly set Galaxy models apart from the iPhone: microSD expansion slot and removable battery - but Counterpoint Technology, a leading market research group, estimates the combined sales figures of the two at around 6 million units within three weeks following their April 2015 global launch.

I've owned several Samsung smartphones over years and to tell you honestly, I'm sincerely wishing the Korean Giant all the best in the coming years. As a Filipino tech blogger and gadget consumer, I'm grateful that Samsung sees and treats the Philippines as a priority market - always releasing their new phone models here ahead of other countries - and if only for that, I will continue to root for this brand.