Samsung's Plan To Keep Huawei At Number 2

So Samsung has been the number one smartphone maker, ever since they beat Nokia 7 years ago.

They've been dominating the mobile landscape since then.

Samsung along with Apple has been the top players of the smartphone world, though Huawei

is now nipping at their heels and about a year ago they were able to beat Apple to the

number two spot in the smartphone maker ranking.

One of the biggest reasons companies like Huawei, Xiaomi and other Chinese smartphone

makers sell hundreds of millions of smartphones each year is that they sell value for money

budget and mid-range handsets for dirt cheap prices.

Apple only exists in the flagship segment, they don't sell budget phones.

Samsung, on the other hand, has an equal presence on both the flagship and budget and mid-range

segment.

Huawei also sells millions of flagship phones but the majority of their shipments come from

the budget and mid-range phones.

And that's the reason they were able to catch up to Samsung and Apple and if the growth

of Huawei continues the way it is right now then they could even beat Samsung by next

year.

So if Samsung wants to keep their number one spot then they need to focus more on the budget

and mid-range phones which they are already doing.

They rebranded the Galaxy A and M series that offers value for money handsets.

But still, Samsung isn't able to match the prices that Huawei and Xiaomi are able to

price for about the same specs.

Samsung's budget and mid-range phones are still a little expensive compared to the competition.

The biggest reason why Huawei and Xiaomi were able to price their phones dirt cheap is that

they don't produce these phones in house.

They outsource it from another company and these companies are called ODMs, original

design manufacturers.

Wingtech is the biggest ODM company in China.

They make smartphones for Huawei, Xiaomi, Oppo and other Chinese makers giving them

the economies of scale to keep costs down and produce new budget phones quickly.

So in order to compete with these Chinese companies, Samsung has decided to move the

production of some Galaxy A and M models to Wingtech.

To be exact Samsung will let Wingtech make 60 million smartphones.

To give you some comparison Samsung sells a little over 300 million smartphones each

year, so that's about 20% of their total smartphone production.

Apple, by the way, also outsource Foxconn to make the iPhones but the difference is

Apple designs the iPhones themselves.

Whereas this isn't the case here with Samsung and wingtech.

Wingtech will design and produce these 60 million phones.

Samsung, of course, will make sure the phones meet their standards.

This, by the way, is good news and bad news at the same time.

Good news because this will mean the prices of the Galaxy A and M series of phones will

go down and they'll be more affordable just like the phones of other Chinese makers.

Bad because Samsung will not produce these 60 million phones.

So the quality that Samsung is known for may not be there with the new phones.

There's always a quality control issue when you let some other companies make phones for

you.

But it is something that Samsung has little to no choice but to follow rivals and use

Chinese ODMs to shave costs.

There's little to no money for companies in budget and mid-range segment and businesswise

it only makes sense for Samsung to let Wingtech make these phones for them.

By the way, Samsung will still make their expensive phones in house, so you'll get the

same Samsung experience that you're used to over the years.

That said, let me know what do you think about this?

Is letting Wingtech make phones for Samsung a good idea?

let me know down in the comments and I'll see you tomorrow...