Smartphone maker Samsung Elect Ltd SSNLF is expected to release a smartphone with a foldable screen in the near term, but one factor makes the achievement less impressive, an analyst said: the steep price tag.
The Analyst
CLSA's senior analyst Sanjeev Rana discussed Samsung's new phone during a Monday CNBC interview.
The Thesis
Samsung's foldable phone is expected to launch in the coming months at a time when demand for smartphones is down across the world, so consumers are unlikely to be interested in paying $2,000 or more for a phone, Rana said.
The high cost of existing flagship phones, at $1,000 or more, could help explain slumping demand, the analyst said, adding that Samsung itself has only "modest expectations" for the new device and is targeting total sales of less than 1 million units.
Investors who view Samsung as merely being a smartphone maker with other businesses on the side may want to reconsider their thesis, Rana said. During the company's second quarter, the smartphone business contributed only 18 percent of total earnings. This marks a reversal from five years ago, when the smartphone business accounted for around 70 percent of Samsung's total profit.
Adiversification away from smartphones isn't necessarily a bad thing for Samsung, Rana said: its broad lineup of technology products implies it has exposure to fast-growing trends, including artificial intelligence, the Internet of Things, the upcoming 5G rollout and the cloud.
Related Links:
Samsung's 'Unbreakable' Smartphone Screen: What You Need To Know
10 Ways AI Has Made Your Life Easier, Via Your Smartphone
Photo courtesy of Samsung.
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