Samsung Electronics Co lost $12 billion in market value on Friday, hit by brokerage downgrades that have underscored concerns about slowing sales of its flagship Galaxy S4 smartphone. The share slide of more than 6 percent comes after it recently introduced two stripped-down versions of the S4, fanning worries that profit margins for its mobile business will suffer…The new stripped-down S4 models will help it widen its lead in the global smartphone market and fend off Chinese competitors, but some fear that the South Korean tech giant is trading in profits for volume.
Me, six weeks ago, in Two Bears:
Bear Argument #1 is the imminent collapse of the iPhone in the face of significantly lower-cost alternatives…[Actually] The iPhone faces little threat in the differentiated high-end of the market. Suggesting this market is limited in size is fair; counting the days until customers flee for cheap phones is silly.
That’s not to say that Bear Argument #1 is invalid; in fact, it’s the Bear Argument for Samsung.
There is precious little that differentiates high-end Android from low-end Android. The second, third, and fourth layers of the mobile hierarchy are identical; the difference is the hardware, and not only are low-end devices increasingly “good enough,” they’re also impossibly cheap.
If you missed it the first time around, I’d (subjectively) suggest you read the whole thing.