The company announced its intention to cut 10 percent of its Korean workforce because of the “ongoing slump in the smartphone market.” Considering that Samsung had 98,999 employees in its home country as of June 30, we are talking about 10,000 total in layoffs.
Updated on 09-09-2015 by Robert Nazarian: Added in news of Samsung denying major layoff
Samsung quickly denied the rumor. A high-ranking official said, “It will only be relocations of workers.” Unfortunately Samsung didn’t offer any other information, such has how these employees would be relocated. They could be moved to different divisions and even offered a move to a different country. It could very well be a way for Samsung to force employees into early retirement, but that’s speculation at this point.
Samsung knew that 2015 was going to be a crucial year. The company shook things up in the mobile division late 2014 and hoped a higher quality Galaxy S6 would turn things around. All those moves did was erase $40 billion in Samsung’s market share after five straight monthly declines. Total smartphone shipments dropped by 3 percent for the second quarter, and the company continues to lose ground in China.
The majority of the affected employees will be in finance, human resources, and public relations. The Korean giant is also expected to cut 50 percent of its general expenses next year.
Samsung’s problems have been two-fold — price pressure and the iPhone. Other Android manufacturers have stepped up their game in offering high quality smartphones at cheaper prices. On top of that, Apple introduced the iPhone 6 and iPhone 6 Plus last fall with bigger screens. Needless to say … they sold like hotcakes.
In an effort to curtail this tailspin, Samsung announced the Galaxy S6 Edge Plus and Galaxy Note 5 a few weeks ahead of schedule. The company was hoping to get a boost before tomorrow’s iPhone 6S announcement. Although these are very nice phones, consumers don’t seem all that impressed. In Samsung’s defense, there really isn’t that much to get excited about these days when it comes to smartphones. You can push specs only so far before consumers don’t care anymore.
Samsung’s failures don’t necessarily mean that Apple will have another great year, though. Apple enjoyed a major spike this year because the company finally increased the display size to respectable levels on the iPhone. This created a lot of excitement and it gave consumers a compelling reason to upgrade. But Apple will have its work cut out for it if it hopes to duplicate that same kind of excitement tomorrow.
