Why Are Sales Tactics Taking Samsung S6 Down?

Samsung warned this morning that its second quarter results would fail to live up to expectations, with profits declining slightly to 6.9 trillion won ($6.13 billion), down from 7.1 trillion won in the same period last year. Though it is Samsung’s strongest performance in the past year, it also marks the seventh straight quarter of decline for Samsung’s operating income.

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Samsung operating income, year-on-year % change

The irony is that this could have been the quarter Samsung finally slipped back into growth. Analysts are blaming the drop on Samsung’s underestimate of just how popular its new phone—the Samsung Galaxy 6 Edge, a sexy device with a screen that curves around the edges—would be, relative to its other phones.

 The company did not release a breakdown of its sales by phone model, but market research firms have said the Edge is far outselling earlier versions. Samsung expected sales of the Edge to be just a quarter as strong as the garden variety Galaxy 6, reports the Wall Street Journal(paywall), citing “a person familiar with the matter.”
 In the event, demand for the two devices was even. The complexity of the Edge’s design and production process meant the company couldn’t make the things fast enough. And it had far too many of the other one. A handful of other factors also share some of the blame for Samsung’s performance: Demand in China is falling, with shipments dropping across the industry, according to Reuters. Apple’s new iPhone 6, with a larger screen, has also been a worthy competitor to Samsung’s high-end devices. And low-priced devices from the likes of Huawei and Xiaomi battered Samsung’s sales at the lower end.

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