Samsung Mobile Market Share and Profitability in Smartphones (2015) PDF

W16620 SAMSUNG MOBILE: MARKET SHARE AND PROFITABILITY IN SMARTPHONES John Dinsmore wrote this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The a...

W16620 SAMSUNG MOBILE: MARKET SHARE AND PROFITABILITY IN SMARTPHONES John Dinsmore wrote this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Copyright © 2016, Richard Ivey School of Business Foundation Version: 2020-01-27 In December 2015, South Korean technology giant Samsung announced a new head to its mobile division, a 54-year-old engineer named DJ Koh. As the former head of research and development in mobile devices for Samsung, Koh had been responsible for developing award-winning innovations for Samsung phones and tablets, such as the mobile payment platform Samsung Pay™ and its security platform Knox™. The appointment of Koh was interpreted by many in the industry as Samsung signalling a desire to further intensify innovation in an increasingly commoditized product area. Koh became the head of Samsung Mobile at a time of intense challenge but also great promise. Complex questions involving significant trade-offs had to be answered. Should the mobile division push for profitability or market share? Were those objectives mutually exclusive? What was the best strategy for obtaining the chosen objective? And, how could Samsung differentiate itself in an increasingly crowded, competitive, and commoditized market? The announcement of Koh’s appointment came on the heels of a challenging year for Samsung. Two handset launches that year had received criticism in the press for the way they were handled. Those launches, which introduced the updated Galaxy S6 and the all-new Galaxy S6 Edge, featured usable screen space that extended beyond the top surface of the device to the sides of the phone. Samsung’s demand estimates for products within those product lines turned out to be inaccurate, resulting in some models being overproduced and others being underproduced. In a hypercompetitive space such as smartphones, where product life cycles were tight and consumer upgrades of devices drove a substantial portion of the revenue, these small miscues made a big impact. As a result of the flawed estimates, mobile division income at Samsung for the second quarter of 2015 dropped 38 per cent. Even so, Samsung was in a very strong position relative to many of its peers. It sold more smartphones than any other company worldwide, and among the publicly traded handset makers—Samsung, Apple, Blackberry, Lenovo, HTC, and Microsoft-Nokia—only two, Samsung and Apple, were profitable. However, whereas the two companies had been relative equals in terms of profitability just three years before, Apple had become the dominant player in that regard, despite Samsung’s dominance over Apple in market share. At the end of the second quarter in 2015, Samsung accounted for 21.4 per cent of all new smartphones sold versus Apple at 13.9 per cent. When it came to profitability, however, the situation was This document is authorized for use only in C. Min Han's Fall 2020 ASM310B Asian Management at SolBridge International School of Business from Aug 2020 to Dec 2020.  Page 2 9B16A046 reversed, with Samsung accounting for approximately 14 per cent of smartphone profits while Apple held the remaining 86 per cent.1 The reason for the discrepancy in profitability between the two companies was simple—price. The smartphone world was dominated by two platforms: iOS, a mobile operating system (OS) used on Apple hardware such as the iPhone; and Google’s Android™, the OS used by almost every other handset maker, including Samsung. The competition by more than 1,000 Android handset manufacturers increasingly led to a perceived lack of differentiation and commoditization of Android phones,2 a situation that had created tremendous pricing pressure for makers of Android phones. Further adding to the oversupply issue was a rising secondary market for used and refurbished phones, with 120 million second-hand phones expected to be purchased in 2017 alone.3 According to a joint study by The Wall Street Journal-ABI Research, in 2015, the average price for an iPhone was US$6874 (among six models on the market at the time), with prices ranging from $449 to $749. The average price for an Android smartphone (the dominant platform utilized by non-Apple smartphone makers, including Samsung) was $254, with Samsung’s six models ranging in price from $144 to $768. Still, some manufacturers such as Microsoft-Nokia professed to be less concerned about profitability—at least at this point in the smartphone’s product life cycle. In their view, the smartphone product category was in an early enough stage in its life cycle that they prioritized market share over margins. Such a strategy prioritized the income derived from the selling of software applications (apps), device upgrades, services, and complementary products over the sale of the initial handset itself. Koh had his work cut out for him. GROWTH RATES IN SMARTPHONE OWNERSHIP AND USE The introduction of the smartphone had a profound effect on the world. Prior to 2007, early models of smartphones layered limited connectivity and functionality on top of a wireless phone, providing abridged access to the Internet and apps. With the introduction of the iPhone and other devices in 2007, the smartphone could live up to its promise to consumers—truly mobile computing and connectivity. In very little time, the smartphone was producing massive changes in political, economic, social, and technological arenas around the globe. By the end of the second quarter of 2015, there were 7.6 billion mobile subscriptions in the world (see Exhibit 1). Of those, smartphones accounted for 3.4 billion subscriptions or 45 per cent of all mobile devices. This explosive growth was not spread evenly around the globe, however. The smartphone was in varying stages of maturity in various parts of the world. The competitive landscape in smartphones was becoming increasingly complex. At its most simplistic, Samsung dominated the overall market share, while Apple ruled the profitable high-end market. Further, more than a thousand other companies competed in the space, including several large and very well-funded 1 Shira Ovide and Daisuke Wakabayashi, “Apple’s Share of Smartphone Industry Profits Soars,” The Wall Street Journal, July 12, 2015, accessed December 1, 2015, www.wsj.com/articles/apples-share-of-smartphone-industrys-profits-soars-to-92- 1436727458. 2 Christopher Mims, “In Smartphone Market, It’s Luxury or Rock Bottom,” The Wall Street Journal, February 1, 2015, accessed April 10, 2016, www.wsj.com/articles/in-smartphone-market-its-luxury-or-rock-bottom-1422842032. 3 Natasha Lomas, “Upgrades Fueling Second Hand Smartphone Sales Boom, Says Gartner,” TechCrunch, February 18, 2015, accessed April 10, 2016, http://techcrunch.com/2015/02/18/reuse-dont-recycle/. 4 All currency amounts are in US$ unless otherwise stated. This document is authorized for use only in C. Min Han's Fall 2020 ASM310B Asian Management at SolBridge International School of Business from Aug 2020 to Dec 2020.  Page 3 9B16A046 Chinese companies such as Huawei, Xiaomi, and Lenovo that were gaining popularity, particularly in Asian markets (see Exhibit 2). Developed Economies Developed economies like the United States and United Kingdom experienced modest growth in smartphone users at the lower end of the market. For the most part, however, revenue for smartphone manufacturers in developed economies was primarily driven by replacements and upgrades. As well, consumer replacement cycles were getting longer, thanks in large part to a change in pricing structure for smartphones. Previously, carriers such as AT&T and Sprint had heavily subsidized consumer purchases of phones in exchange for contract extensions, paying up to $500 of the cost of a new phone and leaving the consumer to pay the remaining $100 to $250. Importantly, these carriers were not subsidizing these purchases but, instead, financing the purchase for consumers by adding $25 to $30 to their monthly bill to pay for the phone. The financing model lowered the upfront cost for the consumer but dramatically raised the overall cost of the phone. That higher cost was, predictably, slowing the upgrade cycle for many consumers. A survey of more than 15,000 U.S. smartphone users regarding their upgrade intentions was released by Gallup in July 2015.5 The survey revealed that only 2 per cent of users planned to upgrade their phones when a new model was released, while 44 per cent said they would upgrade when permitted by their carrier. The remaining 54 per cent said they would upgrade their phones only when the devices were no longer functional. When broken down by platform, 53 per cent of iPhone users were likely to upgrade based on new model releases or carrier permitted upgrades, compared to only 42 per cent of Android users. Not coincidentally, when the platform was broken down by income level, 55 per cent of respondents making more than $75,000 per year owned iPhones while 40 per cent owned an Android. Developing Economies Developing economies were forecast to be the major source of new smartphone customers, and with the customers in these markets being overwhelmingly value-driven, the lower-cost Android phones were leading the way. However, even here, Apple could still be found dominating the top end of the market. For example, Apple logged $16.8 billion in revenue in China in the second quarter of 2015, which represented a 71 per cent rise from the same quarter the previous year. One key question in assessing the nature of the smartphone market concerned future growth. While regular device upgrades by existing smartphone users assured consistent, significant demand, the global market for new users continued to grow at a blistering pace. According to wireless infrastructure company Ericsson,6 on a worldwide basis, there were 2.6 billion smartphone service subscriptions in 2014, with that number growing to 3.4 billion the following year. Further, Ericsson projected a compound annual growth rate of 10 per cent, adding three billion new subscriptions over the next six years and bringing the total to 6.4 billion subscriptions in 2021 (see Exhibit 3). 5 “Americans Split on How Often They Upgrade Their Smartphones,” Gallup, July 8, 2015, accessed February 10, 2015, www.gallup.com/poll/184043/americans-split-often-upgrade-smartphones.aspx. 6 “Mobility Report (2015),” Ericsson, November 2015, accessed February 19, 2015, www.ericsson.com/res/docs/2015/mobility-report/ericsson-mobility-report-nov-2015.pdf. This document is authorized for use only in C. Min Han's Fall 2020 ASM310B Asian Management at SolBridge International School of Business from Aug 2020 to Dec 2020.  Page 4 9B16A046 Competition in the Asia-Pacific Realm With the Asia Pacific realm—China and India in particular—forecasted to be the fastest growing markets for new handset customers, intense competition arose in the region. Handset makers headquartered in Asia included industry heavyweights Samsung, Lenovo, Huawei, Xiaomi, and approximately 1,000 smaller companies. The majority of offerings from Samsung’s competitors were low- to mid-market Android phones designed to cater to developing economies in that region. Samsung had phones positioned at the low, middle, and high points of the market. At the end of the second quarter of 2015, the top three selling smartphone brands in China were Xiaomi (16.6 per cent), Huawei (15.9 per cent), and Samsung (10.8 per cent).7 At the same time, in India, the top three selling brands were Samsung (23 per cent), Micromax (17 per cent), and Intex (11 per cent).8 As noted above, the dominant non-Apple company in China was not Samsung; it was Beijing-based Xiaomi. By the middle of 2015, this four-year-old Chinese consumer electronics company was the second most highly valued start-up in the world (behind Uber Technologies) and the best-selling smartphone brand in China. In the second-most populous country in the world, India, Xiaomi said it was on track to account for 14 per cent of new smartphone sales by the end of 2015.9 Device Upgrades and Platform Switching A key driver in device upgrades and platform switching was the release of new phones. Switching rates between the three major smartphone operating systems—Android, iOS, and Microsoft Windows™— changed considerably after the release of a new iPhone (see Exhibit 4). The available data did not reveal numbers specific to Samsung or switching between brands of Android phones, but they also suggested a couple of key differences between iOS and other platforms. First, Apple was winning the customer platform-switching battle, with fewer than 4 per cent of Apple customers going to other platforms, while Android lost close to 22 per cent and Windows lost 30 per cent. Second, Apple customers appeared to upgrade their phones much more frequently than those who used other platforms, thereby providing an additional, significant source of sales (for Apple), even in mature markets. Given the size and diversity of the Android universe, in terms of switching, was there any indication of differences between brands or models of phones? Market research by Ericsson revealed that switching was much lower for high-end phones, regardless of platform. Operating System One key issue facing Samsung was its operating system. Samsung did have some phones with Microsoft’s Windows operating system, but Samsung phones predominantly featured Android. The Android operating system was the featured operating system of more than 80 per cent of the world’s smartphones. 7 “China Smartphones Insights Q2 2015,” China Internet Watch, September 7, 2015, accessed March 15, 2016, www.chinainternetwatch.com/14537/china-smartphones-insights-q2-2015/. 8 “India's Smartphone Market Soars in the Second Quarter of 2015 with the Help of eTailing, Says IDC,” IDC Press Release, August 11, 2015, accessed September 27, 2016, www.idc.com/getdoc.jsp?containerId=prSG25827215. 9 Yun-Hee Kim, “Chinese Smartphone Maker Xiaomi Makes Inroads in India, Eyes U.S.,” The Wall Street Journal, October 21, 2015, accessed December 10, 2015, www.wsj.com/articles/chinese-smartphone-maker-xiaomi-makes-inroads-in-india- eyes-u-s-1445457731. This document is authorized for use only in C. Min Han's Fall 2020 ASM310B Asian Management at SolBridge International School of Business from Aug 2020 to Dec 2020.  Page 5 9B16A046 Both Android and Google were well-liked and well-respected brands. According to branding agency Interbrand™, Apple was the top brand in the world in 2015. However, the agency ranked Google second and Samsung seventh, and while the addition of the Google brand likely provided value to consumers of Samsung handsets, it made Samsung’s job of differentiating itself from non-Apple competitors that much more difficult (see Exhibit 5). “A big challenge of ours is getting customers to understand that not all Android phones are created equal. There is a lot of customization that takes place in the Android OS by Samsung,” said Alex Duncan, National Director of Sales at Samsung North America. He continued to explain: For example, our security platform, Knox, is a huge differentiator for our Android phones, literally giving our handsets top-secret clearance. But what we find is that customer awareness of these points of differentiation is dependent upon the context and customer segment. Promotions for our Android enhancements resonate less with customers [who are] not actively contemplating a purchase. So, are our Android phones significantly different from other Android phones? Absolutely. Are consumers aware of that difference? Some are, and some are not. John Jackson, research vice president of in the mobile and connected platforms division for industry research firm IDC, added, Customizations to the Android OS by Samsung are likely only recognized by higher involvement customers, such as businesses and consumers in the innovator segment. Lower involvement consumers have a tendency to view all Android operating systems as being the same. So, in terms of differentiation, there’s certainly an argument for Samsung to move away from Android to set itself apart, but it comes at a huge tradeoff. Google’s Android has an app ecosystem, brand, and service layer that provide real value to customers. Plus, Samsung would not only have to expend the resources to build its own OS, it would also have to dedicate the marketing resources to building awareness and trust in that OS. That not only takes a lot of money but, more importantly, it takes a significant amount of time. MOBILE APPLICATIONS AND SERVICES For some players in the smartphone industry, their focus was less about making money when people bought devices and more about making money when people used them. The usage rate of voice traffic had remained flat year over year (a trend that was projected to continue). However, data usage that included email, web browsing, streaming, apps, and service usage was growing exponentially. Data usage per subscriber grew by a multiple of 20 from 2010 to 2015, and by 65 per cent from 2014 to 2015,10 with continued growth projected to 2021 (see Exhibit 6). The exponential growth in mobile data usage was indicative of future of smartphones. Where the “phone” was once the primary value of the device, that aspect was now just one of many apps or services provided. Mobile devices were quickly becoming the dominant platform for online activity, and the smartphone was managing home appliances, starting cars, and taking on an ever-increasing list of functions. Such services not only provided revenue streams for their developers, but they could also provide key points of differentiation and switching costs for handsets and platforms (see Exhibit 7). 10 Ericsson, Ericsson Mobility Report: On the Pulse of Networked Society, November 2015, accessed February 19, 2015, www.ericsson.com/res/docs/2015/mobility-report/ericsson-mobility-report-nov-2015.pdf. This document is authorized for use only in C. Min Han's Fall 2020 ASM310B Asian Management at SolBridge International School of Business from Aug 2020 to Dec 2020.  Page 6 9B16A046 As described by Jackson at IDC, If you look at what Samsung does, it really has developed some very thoughtful, user-centric features to its phones. It deserves a lot of credit for innovation. However, a real difference between Samsung and Apple is that Samsung is product-focused while Apple is platform-focused. Apple has done a great job in selling up entire households not just in phones but in complementary devices—computers, tablets, Apple TV, wearable technologies, and services. Each Apple device reinforces demand for the company’s other products. The Apple OS is at the heart of that. Apple products connect in a seamless way that Android products do not. And it’s a shame, because Samsung has a broad portfolio of popular products from phones to home theatre systems to dishwashers that are going to become increasingly connected. The dominant retailers of mobile apps were Google, Apple, and Amazon, though each handset manufacturer, including Samsung, had its own app store as well. App industry analyst firm App Annie forecasted that global consumer spending on mobile apps would grow from $41 billion in 2015 to just over $101 billion in 2020. This figure excluded “free” apps designed to be monetized via advertising or mobile commerce. For all apps, including paid, free, and e-commerce apps, App Annie forecasted downloads to grow from 110 billion in 2015 to 284 billion in 2020.11 App stores traditionally took 30 per cent of all revenue generated by an app, whether generated through paid download, advertising, or in-app purchase. Further, mobile payments—storing personal credit card information on a phone and then using that phone to make a payment at a point of sale—were skyrocketing. From 2015 to 2020, mobile payments were projected to grow at a compound annual growth rate of 43 per cent, reaching $4 trillion in 2020.12 Apple received 0.15 per cent of purchases made through ApplePay™ while Samsung opted to forgo such merchant fees in pursuit of alternative revenue streams such as advertising.13 In the second quarter of 2015, Apple posted $5 billion in revenue from its service offerings, which included sales of apps via its App Store and media via iTunes, as well as other services such as its mobile payment platform Apple Pay.14 Neither Samsung, nor Amazon, nor Google released revenues specific to mobile services. NEXT STEPS Samsung was the preeminent designer and manufacturer of smartphones in terms of market share—an enviable position. However, the company was dwarfed by Apple in terms of profitability. Had the time come for Samsung to take what profits it could, or did it need to focus on growing its customer base for future profitability? If the priority was profitability, what were the means for Samsung Mobile to maximize its profits in a commoditized industry? If the priority was market share, how could it achieve that goal, and how could the company justify the near-term sacrifice? Could Samsung mobile implement a single, undifferentiated strategy worldwide in pursuit of its goals? Koh had to analyze a complex and rapidly evolving market to then develop a strategy for Samsung Mobile. 11 “The App Forecast,” App Annie, March 27, 2015, accessed May 1, 2016, www.appannie.com/landing/forecast/. 12 James Webster, “Business Strategy: Worldwide Consumer Mobile Payments Forecast 2015–2020,” IDC Financial Insights, June 2015, accessed April 4, 2015, www.idc.com/getdoc.jsp?containerId=FI256909. 13 “Will Samsung Pay Waive Merchant Fees in US?”, PYMNTS, March 10, 2015, accessed February 10, 2016, www.pymnts.com/news/2015/will-samsung-pay-waive-merchant-fees-in-the-u-s/. 14 “Apple Reports Second Quarter Results,” Apple Corporation, April 27, 2015, accessed March 3, 2016, www.apple.com/pr/library/2015/04/27Apple-Reports-Record-Second-Quarter-Results.html. This document is authorized for use only in C. Min Han's Fall 2020 ASM310B Asian Management at SolBridge International School of Business from Aug 2020 to Dec 2020.  Page 7 9B16A046 EXHIBIT 1: TOTAL MOBILE SUBSCRIPTIONS AT END OF Q2 2015 (IN MILLIONS) Total Mobile Subscriptions by End of Q2 2015 1,600 1,400 1,200 1,000 800 600 400 200 0 Latin North Asia Middle Central & Western China Africa India America America Pacific East & Eastern Europe (excluding Africa Europe China & India) Note: Q2 = second quarter. Source: “Mobility Report (2015),” Ericsson, November 2015, accessed February 19, 2015, www.ericsson.com/res/docs/2015/mobility-report/ericsson-mobility-report-nov-2015.pdf. EXHIBIT 2: GLOBAL SMARTPHONE MARKET SHARE BY VENDOR AT END OF Q2 2015 (%) Samsung Apple Huawei Xiaomi Lenovo Others 2015Q2 21.40 13.90 8.70 5.60 4.70 45.70 2014Q2 24.80 11.60 6.70 4.60 8.00 44.30 2013Q2 31.90 12.90 4.30 1.70 5.70 43.60 2012Q2 32.20 16.60 4.10 1.00 5.90 40.20 Note: Q2 = second quarter. Source: “Smartphone Vendor Marketshare Q2 2015,” IDC, August 2015, accessed March 3, 2016, www.idc.com/prodserv/smartphone-market-share.jsp. This document is authorized for use only in C. Min Han's Fall 2020 ASM310B Asian Management at SolBridge International School of Business from Aug 2020 to Dec 2020.  Page 8 9B16A046 EXHIBIT 3: PROJECTED NEW SMARTPHONE SUBSCRIPTIONS BY REGION, 2016–2021 (IN MILLIONS) Projected New Smartphone Subscriptions By Region, 2016–2021 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Latin America North America Asia Pacific Middle East & Central & Western Africa Eastern Europe Europe Source: “Mobility Report (2015),” Ericsson, November 2015, accessed February 19, 2015, www.ericsson.com/res/docs/2015/mobility-report/ericsson-mobility-report-nov-2015.pdf. EXHIBIT 4: HOW NEW IPHONE RELEASES DRIVE PLATFORM SWITCHING Annual Phone Switches and Upgrades before Release of New iPhone (%) Switching to Android iOS Windows Switching Android 20.40 3.60 8.40 from iOS 4.80 13.20 0.00 Windows 20.40 4.80 7.20 Annual Phone Switches & Upgrades after Release of New iPhone (%) Switching to Android iOS Windows Switching Android 21.60 13.20 8.40 from iOS 3.60 54.00 0.00 Windows 20.40 9.60 7.20 Note: The vertical column on the left represents the originating platform, and the horizontal top row represents the destination. A “switch” between the same platforms represents an upgrade of a phone. Source: “Mobility Report (2015),” Ericsson, November 2015, accessed February 19, 2015, www.ericsson.com/res/docs/2015/mobility-report/ericsson-mobility-report-nov-2015.pdf. This document is authorized for use only in C. Min Han's Fall 2020 ASM310B Asian Management at SolBridge International School of Business from Aug 2020 to Dec 2020.  Page 9 9B16A046 EXHIBIT 5: GLOBAL SMARTPHONE OS MARKET SHARE AT END OF Q2 2015 (%) Android iOS Windows BlackBerry Others Phone OS 2015Q2 82.80 13.90 2.60 0.30 0.40 2014Q2 84.80 11.60 2.50 0.50 0.70 2013Q2 79.80 12.90 3.40 2.80 1.20 2012Q2 69.30 16.60 3.10 4.90 6.10 Note: Q2 = second quarter. Source: “Smartphone OS Market Share Q2 2015,” IDC, August 2015, accessed March 3, 2016, www.idc.com/prodserv/smartphone-os-market-share.jsp. EXHIBIT 6: PROJECTED PER CAPITA DATA CONSUMPTION OF SMARTPHONE USERS BY REGION, 2015 VERSUS 2021 (IN GB) Projected Monthly Average Data Use Per User, 2015 vs. 2021 25 20 15 10 5 0 Latin North Asia Pacific Middle East Central & Western America America & Africa Eastern Europe Europe 2015 2021 Note: GB = gigabytes. Source: “Mobility Report (2015),” Ericsson November 2015, accessed February 19, 2015, www.ericsson.com/res/docs/2015/mobility-report/ericsson-mobility-report-nov-2015.pdf. This document is authorized for use only in C. Min Han's Fall 2020 ASM310B Asian Management at SolBridge International School of Business from Aug 2020 to Dec 2020.  Page 10 9B16A046 EXHIBIT 7: PRODUCT PORTFOLIOS FOR SAMSUNG AND APPLE SAMSUNG APPLE Digital Cameras & Camcorders Media Services Accessories Apple Radio Cameras iTunes (Audio, Video Purchase & Rental) Camcorders Personal Computing Home Appliances Accessories Dishwashers Desktops Laundry (Washers & Dryers) Laptops Microwaves Retailing (Apple Store) Ranges Smartphones Refrigerators Accessories Vacuums Apps Home Security & Monitoring Handsets Baby Monitors Services (App Store) Internet Protocol Cameras Tablets Security Systems Accessories Home Theatre & Audio Apps Home Theatre Audio Tablets Wireless Audio Services (App Store) BluRay Players Television Lighting Accessories Memory & Storage Hub Hard Drives Services (App Store) Portable Storage Wearable Technology Personal Computing Accessories Accessories Apps Desktop Watches Laptop Services (App Store) Printers Smarthome (Home networking) Hubs Sensors Outlets Smartphones Accessories Applications New Handsets Used, Refurbished Handsets Services (App Store) Tablets New Tablets Used, Refurbished Tablets Accessories (cords, etc.) Applications Services (App Store) Televisions Wearable Technology Virtual Reality Headsets Watches Source: Compiled by the author with information from “Home Page,” Samsung, accessed September 7, 2016, www.samsung.com/ca/home/; “Home Page,” Apple, accessed September 7, 2016, www.apple.com/ca/. This document is authorized for use only in C. Min Han's Fall 2020 ASM310B Asian Management at SolBridge International School of Business from Aug 2020 to Dec 2020.  Page 11 9B16A046 EXHIBIT 8: CORPORATE EARNINGS OF SAMSUNG AND APPLE AT END OF Q2 2015 (IN MILLIONS) Apple Q2 Earnings Operating Segments Q2 2015 Q1 2015 Q2 2014 Americas $21,316 $30,566 $17,982 Europe $12,204 $17,214 $10,941 Greater China $16,823 $16,144 $9,835 Japan $3,457 $5,448 $4,047 Rest of Asia Pacific $4,210 $5,227 $2,841 Total $58,010 $74,599 $45,646 Note: Q1 = first quarter; Q2 = second quarter. Source: “Corporate Earnings, Q2 2015,” Apple April 27, 2015, accessed February 1, 2016, www.apple.com/pr/library/2015/04/27Apple-Reports-Record-Second-Quarter-Results.html. Revenue in Trillions of South Korean Wan (KRW) Sequential Year/Year Divisional Revenue Q2 2015 Q1 2015 Q2 2014 Change Change Consumer Electronics 6.66 6.22 8.06 7% –17% Mobile Communications 25.50 24.99 27.51 2% –7% Semiconductor 11.29 10.27 9.78 10% 15% Display Panels 6.62 6.85 6.33 3% 5% Total 48.54 47.12 52.35 Divisional Income Consumer Electronics 0.21 0.14 0.77 50% –27% Mobile Communications 2.76 2.74 4.42 1% –38% Semiconductor 3.40 2.93 1.86 16% 82% Display Panels 0.54 0.52 0.22 4% 145% Total 6.90 5.98 7.19 Note: Q1 = first quarter; Q2 = second quarter; KRW = South Korean Wan; US$1 = KRW1,111 on July 1, 2015; Totals are not equal to sum of component parts due to rounding. Source: “Corporate Earnings, Q2 2015,” Samsung, July 30, 2015, accessed February 1, 2016, www.samsung.com/us/aboutsamsung/ir/ireventpresentations/earningsrelease/downloads/2012/20150730_conference_eng. pdf. This document is authorized for use only in C. Min Han's Fall 2020 ASM310B Asian Management at SolBridge International School of Business from Aug 2020 to Dec 2020.