Samsung’s Plan To Keep Huawei At Number 2 – So Samsung has been the number one smartphone maker, ever since they beat Nokia 7 years ago. They’ve been dominating the mobile landscape since then. Samsung, along with Apple, has been the top player in the smartphone world. Though Huawei is now getting at their heels and about a year ago, they were able to beat Apple to the number two spot in the smartphone maker ranking.
One of the biggest reasons companies like Huawei, Xiaomi, and other Chinese smartphone makers sell hundreds of millions of smartphones each year is that they sell value for money budget and mid-range handsets for low dirt prices. Apple only exists in the flagship segment, they don’t sell budget phones. Samsung, on the other hand, has an equal presence on both the flagship and budget and mid-range segment. Huawei also sells millions of flagship phones, but the majority of their shipments come from the budget and mid-range phones.
And that’s the cause they were ready to catch up to Samsung and Apple, and if the growth of Huawei continues the way it is right now, then they could even beat Samsung by next year. So if Samsung wants to keep its number one spot, then they need to focus more on the budget and mid-range phones which they are already doing. They rebranded the Galaxy A and M series that offers value for money handsets.
But still, Samsung isn’t able to match the prices that Huawei and Xiaomi can price for about the same specs. Samsung’s budget and mid-range phones are still a little expensive compared to the competition. The biggest reason why Huawei and Xiaomi were able to price their phones dirt cheap is that they don’t produce these phones in the house. They outsource it from another company, and these companies are called ODMs, original design manufacturers.
Wingtech is the biggest ODM company in China. They make smartphones for Huawei, Xiaomi, Oppo, and other Chinese makers. Giving them economies of scale to keep costs down and produce new budget phones quickly. So to compete with these Chinese companies. Samsung has decided to move the production of some Galaxy A and M models to Wingtech. To be exact, Samsung will let Wingtech make 60 million smartphones. To give you some comparison, Samsung sells a little over 300 million smartphones each year. So that’s about 20% of their total smartphone production.
Apple, by the way, also outsources Foxconn to make the iPhones, but the difference is Apple designs the iPhones themselves. Whereas this isn’t the case here with Samsung and wing tech. Wingtech will design and produce these 60 million phones. Samsung, of course, will make sure the phones meet their standards. This, by the way, is good news and bad news at the same time.
Good news because this will mean the prices of the Galaxy A and M series of phones will go down. And they’ll be more affordable, just like the phones of other Chinese makers. Bad because Samsung will not produce these 60 million phones. So the quality that Samsung is known for may not be there with the new phones. There’s always a quality control issue when you let some other companies make phones for you. But it is something that Samsung has little to no choice but to follow rivals and use Chinese ODMs to shave costs.
There’s little to no money for companies in budget and mid-range segment and businesswise. It only makes sense for Samsung to let Wingtech make these phones for them. By the way, Samsung will still make their expensive phones in the house.