With its smartphone business under considerable pressure last year, South Korean electronics conglomerate Samsung (NASDAQOTH:SSNLF) decided to become better by simplifying. Instead of its prior approach of manufacturing a plethora of form factors and iterations to micro-target every market, an article in The Wall Street Journal reported the company would cut the number of models by 25%-30% in an attempt to cut costs with an eye toward specialization.
One could argue this new approach has not been any more effective than the last. When the company reported its first operating profit growth in nearly two years during its third-quarter results, it was not on the strength on the company's IT and Mobile communications division, where the smartphone results are ensconced, but rather from the company's Device Solutions division, which increased its operational profit nearly 100% on a year-over-year basis, as the semiconductor and display panel business did well.
For the high-end Galaxy models, however, it seems the company never quite got the memo. After the Journal's report, the company went on to release the traditional two form factors for its signature Galaxy line -- the Galaxy S6 and Galaxy S6 Edge -- followed by two new phablet-sized high-end models: the Galaxy Note 5 and the Galaxy S6 Edge+. If a new report from Reuters is accurate, look for more variation from Samsung next year.
Reuters expects more changes
Per Reuters, the company will launch two versions of its Galaxy S7 smartphone -- just like before -- but the screen sizes will now be different. Instead of the 5.1-inch screen size for both the Galaxy S7 and Galaxy S7 Edge, the report now details both a 5.2-inch flat screen, similar to the S6 predecessor, and a new 5.5-inch size for the curved-screen Galaxy S7 Edge unit. The ultimate question is: Is this keeping in line with the company's press for simplicity, or yet another form factor change?
Before last year's Edge additions -- the Edge and Edge+, the company generally released two wide-scale models per year, with one Galaxy line in April and one Note line in August/October. While Reuters does not address the company's strategy, it will be interesting to see if the company uses this new 5.5-inch Galaxy S7 Edge model to replace the Galaxy S6 Edge and S6 Edge+, turning four released models into three. This seems entirely plausible considering the company's existing strategy to cut back on models 25%-30%.
Is three the new two?
Ironically, the company Samsung aims to follow by simplifying models seems to be going in the opposite direction. For years, Apple (NASDAQ:AAPL) only released one iPhone model, but it changed its policy with the iPhone 5s and iPhone 5c in late 2013. The two form factors persisted, but the differentiating feature became screen size more so than features and hardware.
The rumor mill is swirling about Apple releasing an additional new model in 2016. Numerous reports are the company will return to a 4-inch extended model tentatively dubbed the iPhone 6c. The reports have centered on the phone being officially unveiled in Apple's March event and to go on sale soon thereafter, presumably boosting sales in Apple's seasonally slower third fiscal quarter.
If Samsung's newest unit combines both Edge units, it seems three is the new two for high-end smartphone sales. Whether this will reverse Samsung's sales is an entirely different question entirely, however.
Jamal Carnette owns shares of Apple. The Motley Fool owns shares of and recommends Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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