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Samsung’s reputation has been hurt by Galaxy S22 price cuts at home

Samsung Electronics’ flagship smartphone Galaxy S22 has been hit by reports of poor performance, and just weeks after its launch, carriers cut the price of it at home in South Korea by half, hurting its image as an iPhone competitor.

Consumers have complained — and even filed a class action lawsuit — that the mobile phone maker is touting what it calls its most powerful smartphone, but with scant details about performance management software that they say is drastically slowing down the premium device. class when using resource-intensive applications.

Such are the complaints that the Korean Fair Trade Commission launched an investigation last month into the world’s largest phone supplier.

The controversy represents a blow to Samsung’s reputation for high-end mobile phones and possibly to its finances as the company attempts to offset two years of premium sales that fall short of analyst estimates and reverse its declining market share.

“The dispute will inevitably deal a major blow to Samsung’s reputation,” said analyst Lee Seung-woo of Eugene Investment & Securities.

At the heart of the complaints is Samsung’s Game Optimization Service (GOS), which manages the device’s performance during gaming to prevent overheating and extend battery life. The manufacturer introduced the software in 2016, just months before it dropped the premium Galaxy Note 7 after a series of battery fires.

GOS automatically throttles the phone’s performance when playing games and using other resource-intensive apps, according to Geekbench, a widely used performance benchmarking tool that found the software slowed down the S22’s processor by as much as 46 percent.

The extent to which the GOS is slowing down the S22, the lack of details about the software in the marketing materials, and the inability to turn it off caused an uproar on social media.

“This is an unprecedented, insane problem that cannot be justified in any way,” ITSub, a YouTuber with 2.1 million subscribers who specializes in gadgets, said in a YouTube post.

Samsung said it released an update allowing users to disable software without risking security. He also stated that he will continue to invest in innovation in both hardware and software.

Falling prices

Sales of the S22 series hit 1 million phones in South Korea within six weeks of release, hitting the mark two weeks faster than its predecessor, according to Samsung.

“The intentional performance degradation has certainly had a negative impact, but its actual impact on Samsung sales appears to be limited. The data shows sales haven’t been hit hard,” said analyst Kim Ji-sang at Kiwoom Securities.

However, South Korea’s three major telecommunications operators have nearly doubled their subsidies for the S22, cutting its price to 5,49,000 won (roughly Rs. 33,880) from 9,99,000 won (roughly Rs. 61,650). Apple’s iPhone 13, released in October, starts at 1,090,000 won (roughly Rs. 67,270), with carriers offering smaller subsidies of around 150,000 won (roughly Rs. 9,260).

“When subsidies are increased at the same time in all three telecommunications companies, it is usually the manufacturer who contributes,” said a spokesman for telecom operator LG Uplus, declining to be named due to the sensitivity of the issue.

Samsung’s 2021 market share in devices over $400 (roughly Rs. 33,340) fell 3 percentage points to 17 percent from the previous year, while Apple’s share rose 5 percentage points to 60 percent, researcher data showed Counterpoint market. The data also showed that sales of both the S20 and S21 fell short of the S series’ first-year norm of 30 million units.

Early shipments of the S22, launched in late February, indicate that Samsung will move more than 6 million phones by the end of March, broadly in line with expectations, said Counterpoint deputy director Sujeong Lim.

However, Li of Eugene Investment & Securities expects the GOS furor, coupled with increased component costs, to leave Samsung’s mobile unit’s April-June operating income at 3 trillion won (roughly Rs. 18,510 crore), up from previous guidance. at 3.4 won. trillion (approximately Rs 20,980 crores).

Samsung on Thursday said it expects to report a projected 50 percent rise in total operating profit for January-March on April 28 as demand for its memory chips remains robust.

Speed ​​limit

A teardown of the cheapest S22 revealed that the phone is missing a cooling component called a vapor chamber, which implies an increased reliance on thermal management software, reviewers say.

Analysts say the penchant for software solutions stems from an updated policy to cut costs, a strategy they say undermines the reputation of a hardware-powered innovator.

Li said that Samsung “is focusing too much on cutting costs, which is what led to this unfortunate incident.”

Samsung Electronics Vice President and CEO Han Jung-hee told the annual shareholders meeting last month that he “will not compromise on quality for the sake of cutting costs and will continue to offer products that prioritize first-class experience and quality.”

At least 1,885 consumers are unconvinced, filing a class action lawsuit claiming that Samsung’s marketing is overstating the S22’s performance.

“If a Porsche has a speed limit of 100 kilometers (62 miles) per hour, would you still buy it?” said Kim Hong-chan, a consumer lawyer, adding that about 1,500 people have joined in filing a second class action lawsuit.

© Thomson Reuters 2022

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