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Samsung racked up 20 million sales (15 million GS6 / 5 million GS6 Edge) in preorders alone; production has been ramped up

It's been precisely a week since Samsung Electronics Comp., Ltd. (KRX:005930) (KRX:005935) launched the Galaxy S6 and S6 Edge.  And while it's early it's been a wild -- and record setting ride thus far -- the kind of story that will surely comprise a seminal chapter when the story of Samsung is someday written down in the rear view.

I. From the Ashes of Defeat Rises a Hardened New Design

The story of the duo is a unique and yet all too familiar narrative of complacency formenting a bitter failure which would ultimately come to pave the path to redemption.  Unveiled in March, Samsung had hoped desparately that the radical redesign of the Galaxy S6 (GS6) and S6 Edge would free it from the stormclouds bred by the Galaxy S5's sales fizzle.  

Now after keeping quiet amid building buzz, some executives at Samsung has joined the crowd of optimistic voices, with one even predicting record-setting sales of 70 million GS6 and GS6 Edge smartphones.

It's an outcome that would have seemed far from likely last year.

Samsung building by night
The world's largest smartphone maker is hoping for a comeback in the high end space.
[Image Source: tractoroutdoor.com]

After managing to sell 10 million Galaxy S4s (GS4s) in just a months and 40 million GS4s in the device's first 6 months on the market, hopes were high about Galaxy S5.  However, many fans were delivered when rumors of a metal body redesign proved false and the true GS5 turned out to be a relatively unambitious upgrade over the previous generation.

Many worried that the uninspired plastic-body flagship phone might slow Samsung's once sterling growth in the premium smartphone space.  It did that and worse.

At first sales appeared healthy enough with 10 million units sold in just 25 days.  But demand for the GS5 quickly dried up and by Nov. 2014 reports indicated the GS5 had fallen short of the sales mark of the previous generation by as much as 40 percent.  While not an outright flop, its slow sales were a sore spot for Samsung and a disappointment to investors who had cheered the growth seen in the previous four generations of Galaxy S smartphones.  All told, the GS5 is estimated to have moved around 30 million units last year.

Broken smartphone
The Galaxy S5 stalled Samsung's growth trajectory. [Image Source: Shutterstock]

Given that poor performance expectations were low during the wind up to the launch of the Galaxy S6 smartphone, which -- as it turns out -- would also come with a quirky curved screen companion the Galaxy S6 Edge.  

But Samsung would not allow its Galaxy S Series to go quietly into the night.  The veteran brand risked it all on a complete design reboot.  Essentially marking a brand new start for Samsung's high end ambitions, the GS6 was designed from the ground up under the codename "Project Zero."  And early indications looks like the gambit has paid off.

II. Comeback Accelerates

Sales estimates' upward trajectory have demonstrated just how different the narrative has been between the GS5 and GS6.  With the GS5 things started out promisingly and fell flat.  With the GS6 expectations had been checked, but have rapidly crept upwards:
  • 38 million --
    # of GS6s sales analysts at Citigroup Inc.'s (C) Citibank forecast in Jan. 2015.
     
  • MARCH 1 -- Samsung unveils the GS6 and GS6 Edge.
     
  • 20 million --
    The number of Galaxy S6 and S6 Edge devices Samsung tells The Korea Times have been preordered in just a week.  Samsung claims 15 million GS6 preorders and 5 million GS6 edge preorders.
     
  • 7-8 million -- Samsung's bumped production target, announced on March 11
     
  • 46 million --
    The figure Citibank's Henry H. Kim revises his sales estimates to that same day -- a bump upwards of 21% 
     
  • "70 million plus" --
    the number of GS6 and GS6 Edge sales an unnamed Samsung executive predicted to The Korea Times on April 15.
Galaxy S6 and S6 Edge

It's increasingly looking like the GS6 and its twin the GS6 Edge are truly hero phones, desparately needed for the South Korean phonemaker.  With profits slumping over the past year, Samsung at last has cause for true optimism.  While it's unclear whether the "70 million plus" figure refers to 2015 sales, or perhaps lifetime sales, either way it would be a record for the iconic brand.

III. Confidence is Growing

In a launch press release CEO JK Shin offered a sober assessment of the device's development process.  He referenced the GS5 miss, commenting:

By listening to our customers, and learning from both our success and missteps, we continuously push forward new technologies and ideas. With a reimagined design, robust partner network and novel services, the Samsung Galaxy S6 and Galaxy S6 edge offer users the ultimate experience in smartphone options.
 
Galaxy S6 Edge
Samsung plugs its proud revival of the Galaxy nameplate at the Gostiny Dvor for Moscow Fashion Week. 

Now after suffering the bitter taste of disappointment in the last generation, success is close enough for some Samsung executives to taste.  One unnamed Samsung executive enthused to The Korea Times:

The Galaxy S6 and S6 Edge are drawing positive responses. I have no doubt that they will be the biggest-sellers in the Galaxy series ever.  We expect 70 million plus.

Samsung Vice Chairman Kwon Oh-hyun was a bit more cautious, stating:

The S6 should do well. The first week looks impressive.

Meanwhile a second unnamed Samsung executive summarized simply to the Korean business magazine:

We are back on track.

It's early, but it's starting to look like they're right.  The Galaxy S Series -- which once looked to be fading -- is back as the smartphones to beat.

iPhone 6+ vs. Galaxy S6
Thinner than an iPhone 6/6+, the razor thin Galaxy S6 is not only beautiful on the outside -- it packs pricier hardware than the iPhone inside. [Image Source: Digital Trends]

In a way the success is less startling when you see on paper estimates of just how good a deal Samsung is giving consumers.  Reportedly the 64 GB Galaxy S6 costs more to make than the comparable 64 GB Apple, Inc. (AAPLiPhone 6 Plus -- $290 USD per unit for the variant on Verizon Communications Inc.'s (VZ) network according to market to research firm IHS.  And yet its unlocked version retails for $699 USD -- $49 USD for the iPhone 6 Plus.

Many at Samsung will be wary of speaking prematurely after watching the GS5's rapid sales deceleration.  But it's hard to deny that this time it feels different.  For Samsung -- humbled, but never broken -- perhaps the journey along the road to redemption in the premium smartphone market is nearly finished.

Source: The Korean Times





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