<div>As the smartphone action shifts to the mass market, leaders Samsung Electronics Co Ltd and Apple Inc are under pressure to make their high-end phones more affordable to revive sales. And that may spell trouble for already-softening margins.<br /><br /><div>Samsung, which said on Tuesday it would likely post a second straight quarterly profit decline, has knocked around a tenth off the price of its Galaxy S5 in South Korea, in the first such move for a marquee smartphone launch — the S5 rolls out globally on Friday.<br /><br /></div><div>And it's throwing in a free gift pack of media subscriptions and web apps worth 600,000 won.</div><div> </div><div>The mass market — where a smartphone can be had for as little as $25 — is the new mobile device battleground, as high-end growth eases off with sales slowing in mature markets. <br /><br />Japan, for example, may see smartphone shipments shrink this year, according to researcher IDC.</div><div> </div><div>Samsung's flagship S5 price cut suggests the South Korean firm wants to encourage users to trade up to a fancier phone - at a potential cost to its margins.</div><div> </div><div>Samsung's mobile business operating margins dipped to 16 per cent in October-December from 18 per cent over the whole of 2013.</div><div> </div><div>"It reflects how much Samsung is agonizing to secure margins. They're now offering premium models at lower prices as the demand outlook for high-end phones remains uncertain," said Lee Seung-woo, an analyst at IBK Securities.</div><div> </div><div>Premium smartphones tend to be priced at above $300 and pack in more features, such as more powerful processing power, high resolution display, better cameras and fingerprint reading. <br /></div><div><br />With the S5, which has few hardware improvements from its S4 predecessor, industry watchers reckon Samsung is aiming more at a broad mass market than tech savvy users.<br /></div><div> </div><div>To be sure, Samsung has a far broader product line-up than rival Apple, and it has some leeway to trim prices given that manufacturing costs have fallen.</div><div><br />Lee Min-hee, an analyst at IM Investment, reckons the total cost of production materials for the S5 - from the battery and screen to the processor and sensors — will be 10-15 per cent lower than for the S4.</div><div> </div></div>
<div>As the smartphone action shifts to the mass market, leaders Samsung Electronics Co Ltd and Apple Inc are under pressure to make their high-end phones more affordable to revive sales. And that may spell trouble for already-softening margins.<br /><br /><div>Samsung, which said on Tuesday it would likely post a second straight quarterly profit decline, has knocked around a tenth off the price of its Galaxy S5 in South Korea, in the first such move for a marquee smartphone launch — the S5 rolls out globally on Friday.<br /><br /></div><div>And it's throwing in a free gift pack of media subscriptions and web apps worth 600,000 won.</div><div> </div><div>The mass market — where a smartphone can be had for as little as $25 — is the new mobile device battleground, as high-end growth eases off with sales slowing in mature markets. <br /><br />Japan, for example, may see smartphone shipments shrink this year, according to researcher IDC.</div><div> </div><div>Samsung's flagship S5 price cut suggests the South Korean firm wants to encourage users to trade up to a fancier phone - at a potential cost to its margins.</div><div> </div><div>Samsung's mobile business operating margins dipped to 16 per cent in October-December from 18 per cent over the whole of 2013.</div><div> </div><div>"It reflects how much Samsung is agonizing to secure margins. They're now offering premium models at lower prices as the demand outlook for high-end phones remains uncertain," said Lee Seung-woo, an analyst at IBK Securities.</div><div> </div><div>Premium smartphones tend to be priced at above $300 and pack in more features, such as more powerful processing power, high resolution display, better cameras and fingerprint reading. <br /></div><div><br />With the S5, which has few hardware improvements from its S4 predecessor, industry watchers reckon Samsung is aiming more at a broad mass market than tech savvy users.<br /></div><div> </div><div>To be sure, Samsung has a far broader product line-up than rival Apple, and it has some leeway to trim prices given that manufacturing costs have fallen.</div><div><br />Lee Min-hee, an analyst at IM Investment, reckons the total cost of production materials for the S5 - from the battery and screen to the processor and sensors — will be 10-15 per cent lower than for the S4.</div><div> </div></div>