Google and Samsung feel the smartphone heat too

Google’s device business was also under pressure in the first quarter. During an earnings call, Alphabet CFO Ruth Porat said sales of the flagship Pixel handset were down year-on-year due to “recent pressures in the premium smartphone market”. Like larger handset makers, Google is hoping hardware growth will come from non-smartphone devices, and CEO Sundar Pichai claimed there was “strong momentum” behind the Home smart speaker with its Assistant ecosystem.

Pichai said: “We really see it as incredibly important to drive the future of computing forward and to make sure our services are presented to users the way we intended them to be. Computing will evolve even beyond phones and we want to make sure we’re in there”.

Google does not break out figures for its hardware business but includes it in its “other revenues” category, which grew from $4.4bn in Q1 2018 to $5.4bn in the recent quarter.

Samsung was also hit by the smartphone slowdown and the shift of market share towards Chinese providers. The Korean firm’s profits slumped by 60% year-on-year in the first quarter, reaching KRW6.2 trillion ($5.3bn) down from KRW15.64 trillion ($13.4bn) a year earlier. Revenue fell by 14% to KRW52.4 trillion ($45bn).

Robert Yi, head of investor relations at Samsung, did not lay all the blame on handsets, but also cited “unfavorable memory market conditions and display business”. He added: “For the second half of 2019, the company expects memory chip demand for high-density products to increase, but uncertainties in the external environment will persist.”

The networks unit was a source of growth as Samsung gains a place in several large 5G roll-outs, especially in its homeland; and earnings at its System LSI and Foundry businesses also improved.

Samsung’s S10 handset sales were solid during the quarter, the company said, but it reported a 40% fall in operating profit in its mobile business.