Amid the global smartphone market slump, Samsung has leaned on its Galaxy A series as a chief growth engine — a strategy that could also be contributing to the company's better-than-expected Q3 earnings guidance released yesterday.
Samsung consolidated its lineup of low- to midtier smartphones in 2019 under the new Galaxy A series, and it has since seen device sales mount, with shipments reaching over 20 million in July alone, according to Counterpoint Research. And during Q2 2019, the Galaxy A series accounted for over half (56%) of Samsung's smartphone sales. The strength of the Galaxy A series largely helped Samsung's smartphone shipments return to annual growth in Q2 after six consecutive quarters of declines.
Here are two key trends that have contributed to the success of the Galaxy A series:
- Midtier smartphones have grown their share of overall device shipments. Smartphones in the $150 to $399 price range captured 37% of global device sales in Q2 2019, up 8 percentage points from Q1 2018, according to Counterpoint Research. This growth is driven by consumers in emerging markets quickly trading up from their first low-end smartphone purchase to a midtier device.
- Competition from Huawei has abated following the geopolitical tensions between the US and China. Sales of Samsung devices within the $200 to $299 price bracket — a subset of the midtier segment — spiked in March 2019 and continued to grow through Q2, coinciding with the US trade ban on Huawei, which severely affected device sales in Europe. By July 2019, Samsung grew its share in the subset from 20% at the beginning of the year to 40%, while Huawei stagnated at 13%, and Huawei-owned Honor fell from 14% to less than 5%.
Samsung should continue adding new devices to the Galaxy A series, adjusting positioning in line with what constitutes midtier in each region. For instance, Samsung launched the A20s smartphone in India this week, after launching it in Malaysia last month. The company also launched the A10s, an update to the first device in the Galaxy A series, in Europe during August 2019.
At the higher end of the Galaxy A series spectrum, Samsung launched the A90 5G in South Korea, one of the first markets with commercial 5G services. Though this may look like an extensive range to fall within the same product lineup, Samsung seems to be taking the approach of simply positioning Galaxy A series devices to provide outsized functionality for price, tailored to particular regions. The company will likely see continued growth through this practice, as it builds on the momentum of the aforementioned trends, which look poised to persist.