With low sales of mobile phones, it is not even worth turning on the production line

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Tomáš Balík has been working as a marketing director in the Czech representative office of Samsung for almost five years. Before that, he worked in the management of the electronics retailer Datart and the operator O2 (Telefónica). In an interview for iDNES.cz, he says that he is not happy about discounts, but they are an integral part of the fight between sellers. It explains why the Samsung Galaxy M series of smartphones disappeared from European stores. We also asked about the success of the new folding models Z Flip 5 and Z Fold 5, including their failure rate.

How are the Z Flip 5 and Z Fold 5 models introduced in the summer doing?
Well beyond expectations, we surpassed last year. The biggest success is understandably reaped by the flip, because it has the most visible innovations.

The ratio between flips and folds is roughly 70 to 30 percent, which roughly matches the results across Europe. However, what pleases me very much is the half-and-half ratio between women and men. This makes me very happy, the share of male customers is constantly growing. We were a bit worried that it would be a very feminine phone, and it is surprisingly very masculine.

To be honest, I’ve historically considered clamshells to be all-purpose phones. Although in ancient times Samsung was famous for women’s models in pink colors and perhaps with a menstrual calendar.
In Korea, they are very open about colors and other crazy things. There, even grown men are able to put teddy bears on their phones and they are not afraid of colors. So we were a little afraid that the flip would not become a similarly set up device. But the reality is different, which makes us happy.

Discounts are entirely up to the sellers, we do not set the price for them. Overall, we are not happy with the discounts.

For a long time, the Flip was practically the only clamshell with a flexible display on the market. Now, however, Motorola has introduced both a competitor for the Flip 5 and a lightweight version of the Razr, which costs 21,500 crowns. Will you compete with last year’s discounted Flip 4?
I am glad that there is competition and that Motorola has two models. And I may be one of the few who says that someone else should enter the jigsaw puzzle market. It will help to build the market for these devices, people will get more awareness about these devices.

Does Samsung plan to respond to the cheaper Razr 40 with a cheaper model that could bring the clamshell under the 20 thousand crowns mark in the long term?
I don’t know, and even if I did, I can’t tell you. The future portfolio is a big trade secret.

With various discounts and bonuses, Flip 4 could be bought for less than 20,000 crowns during its life cycle. So is it realistic for the clam to go below the 20,000 crown mark permanently?
The mentioned event was connected with a trade-in event, i.e. with the purchase of an old device. In addition, the discounts are entirely up to the sellers, we do not set the price for them. Overall, we are not happy with the discounts. But the reality of the market is what it is. Rather, we want to focus on service, sales support and other services that have added value.

It is quite possible that one day some merchant will offer a clam for ten thousand, but that is his decision. Currently, the online market in particular is a bit nervous. Sales are falling, and because money is expensive now, inventory is rising. Marketers try to eliminate this, so they try different sales strategies. At the same time, it is true that with the time a product is on the market, its price gradually erodes. However, I cannot predict where it will move.

You mentioned trade-in, i.e. the purchase of a used mobile phone when buying a new one. Do you do this very often, is it successful?
First of all, we do not buy mobile phones directly, our partner Mobile Emergency does it for us. But there are different variants in Europe and the world. Mobile phones are also bought by operators or locally by manufacturers. Some of the devices are ecologically disposed of, some are refurbished. We once thought that we would also do it directly, but in the end we are going in partner mode.

The size of the second-hand mobile phone market in the Czech Republic can only be estimated, it is not monitored. But I suppose it is relatively large. But this does not mean that all purchased and refurbished devices will end up on the domestic market. Exporting certainly works here as well. In any case, it’s the right way, it’s ecological. Either it will be recycled or the life of the device will be extended.

If there is a redemption bonus with the trade-in, who pays it?
In this regard, the purchase must be divided into two parts. We provide the bonus, the partner decides the purchase price.

Recently, research agencies published the results of manufacturers for the second quarter of this year. The results are not good, but what is interesting is that the sales of new devices in selected markets are already quite fundamentally influenced by refurbished secondhand phones.
I can’t judge this, I don’t see markets where this trend is striking. But today refurbished phones are certainly a relatively interesting segment in certain markets. However, Europe is not an example of a market where this is happening.

And yes, unit sales are down. But on the other hand, the value of the goods sold increases. So people buy more expensive devices. Their longer service life can be related to this, the replacement time is extended. Phones are generally better quality and last longer.

Even large markets such as Germany, France or Britain do not decide on the composition of the current portfolio. That is handled by the head office, and when the head office decides that the M series will return to Europe, it will return.

Did you mention longevity, which is actually the most common complaint people make these days? And what about the display foil for flips and folds?
Above all, we have a very low number of complaints. Most often it happens that damage occurs after some mechanical damage. It may not be noticeable at first glance, but it usually becomes clear after opening the device in the service center.

We have a sufficiently robust service plan for the display cover film of folding phones. The film is simply a consumer product, although we try and improve the film in development. We change it for customers free of charge not only in service centers, but also in branded stores. However, it is important that customers do not tear off the film themselves.

Are there hinge and display issues with foldable phones?
No, just that in this direction these elements are bulletproof. Either there will be mechanical damage to the device, for example sand gets between the halves and then the display can be scratched. Which is exactly what happens when the customer tears off the foil himself. The joint itself and the flexible display have a durability longer than even the theoretical very long life of the device itself.

Your portfolio is pretty lean today. The models of the Galaxy M and Galaxy A series have completely disappeared from your offer, you actually only have three models this year, the fourth (according to the label) is already from last autumn.
It’s our strategy. There won’t be any M series models in Europe. The decision for Europe is that no European country will have an M. We’ve had long-term feedback from customers that they don’t really understand the difference between the A and M series, the models overlap there. There are markets where more rows are needed, but this is not currently the case in Europe. But of course the situation can change, these strategic decisions are made by headquarters.

We offer low-end models A04s and A14 and then a very decent middle class in the form of models A34 and A54. We thus cover the entire price range from cheap to high-end devices. We only leave out the category of the very cheapest ones. In addition, when creating a portfolio, it is necessary to take into account the expected sales. If they were low, it is simply not worth turning on the production line. It is true that phones are made to order for individual markets.

Tomáš Balík, Marketing Director of Samsung Electronics for the Czech Republic

In addition to the new models, you also had some quite old ones on offer this year. In the summer, I was drawn to an ad for the Galaxy S20 FE, which is a phone from 2020, so currently almost exactly three years old.
It happens that they have parts in the factory, so they resume production. Or a certain amount of phones will remain in stock somewhere. Then the question is what is the current price and what the phone can offer with regard to other devices in the portfolio. If we get an interesting offer and it makes sense for us to start selling such a device again, then why not.

Closing the portfolio debate, can we assume that next year will be similar to this year?
It can be assumed. But beware, even large markets such as Germany, France or Britain do not decide the composition of the current portfolio. That is handled by the head office, and when the head office decides that the M series will return to Europe, it will return. We have to accept it. We then have to stratify those models well in order to be able to offer a suitable model to each customer. On the other hand, it is not worth occupying every thousand kroner price level. We also have to respect the trends of our partners, for example operators want better phones and prefer devices with 5G.

Will there still be phones without 5G next year?
I don’t dare to guess, but the market is moving towards 5G devices. I estimate this at 75 to 80 percent of 5G devices. However, LTE devices will remain in the cheapest segment.

In addition to 5G, one of the current trends is also eSIM. You also put it in the Galaxy A54 model this year, i.e. in the middle class. Do you think eSIM will become a universal standard?
I think that within five years it will be the standard, the physical SIM card will disappear. But of course it will also depend on the operators and the method of distribution. Every market is a little different in this regard.


The article is in Czech

Tags: sales mobile phones worth turning production line

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