Samsung Electronics seeks China comeback with first metallic smartphones

Fri Oct 31, 2014 3:39am EDT
 
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By Se Young Lee

SEOUL (Reuters) - Samsung Electronics Co Ltd unveiled two mid-tier handsets with a premium design as it prepared to deliver a riposte to its low-priced Chinese rivals and reclaim its title as the top brand in the world's biggest smartphone market.

Samsung's smartphone woes began late last year and persisted through July-September, with its global market share down on year for the third straight quarter and its profit scraping at a three-year low.

Its struggles were prominent in China, the world's biggest smartphone market, where Samsung was dethroned by local upstart Xiaomi Inc as the top smartphone maker in the second quarter. It does not help that Samsung's lower-end products are too expensive and not sufficiently distinctive compared to those touted by Xiaomi and Lenovo Group Ltd, analysts say.

The Galaxy A3 and A5 are seen by analysts as Samsung's first counter-strike. Initially launching in China in November, they will be Samsung's first devices to feature fully metallic bodies and its thinnest smartphones to date. In size, the A3 and A5 are comparable to those of the top-of-the-line Galaxy S5, though of lesser screen resolution quality.

"I think improving specs on the mid-tier products by using features like a full metal body is something that Samsung needed to do to respond to the Chinese rivals," said Seoul-based IBK Asset Management fund manager Kim Hyun-su, who holds Samsung shares.

Samsung classified the new phones as mid-tier, and said they will be launched in other "select markets", without disclosing the pricing.

The announcement, combined with hopes for an earnings recovery and bigger dividends, pushed Samsung's shares in Seoul to the highest close in more than two months. The stock has gained 10 percent since Thursday.

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A man walks out of Samsung Electronics' headquarters in Seoul, in this January 6, 2014 file picture.    REUTERS/Kim Hong-Ji/Files