Samsung reportedly cutting Galaxy S4 production, S3 going in early retirement

A model poses with Galaxy Note of Samsung Electronics during a local launch event for Samsung's mobile devices at the company's headquarters in Seoul

The unstoppable advance of Samsung may have hit a bump in the road. A report from South Korean claims the Apple smartphone rival plans to reduce production of its just-released Galaxy S4 by 10-15 percent, while sending the S3 to an early retirement.

The South Korean-based firm also believes the flagship Galaxy S4 won’t be able to increase its share of the smartphone market alone, requiring a range of new models to do the job, the Thursday report claimed…

Earlier this month, Samsung’s share price fell by six percent following a JP Morgan note that Galaxy S4 orders had fallen by up to thirty percent. The news instantly erased an astounding $12 billion in Samsung market cap as investors hit the ejection handle.

Samsung has poured billions into its marketing efforts, positioning the huge corporate conglomerate as an underdog competing with the well-oiled image machine of Apple.

Are we seeing the first signs that – like Apple – Samsung is subject to the vagaries of all companies, including overzealous analysts?

Samsung Electronics president Jongkyun Shin dismissed the earlier JP Morgan report, telling reporters “there is no problem” with Galaxy S4 sales.

The Korea IT News begs to differ:

However, a warning light started to blink this month in Samsung’s supply chain management, as the gap between Galaxy S4s sold in the market and the parts inventory started to widen.

July orders for Galaxy S4 parts is for 6.5 million smartphones – about half the number of orders placed in May, claims the site. After a two-month period from April to May, there’s been a downward trend in parts orders.

To support flagging sales of the Galaxy S4 – which reportedly are not strong enough to boost Samsung’s smartphone share alone – the company just introduced a range of Galaxy-branded gear, including the new Galaxy S4 Mini, coming in July and pictured below.

Galaxy S4 Mini (three-up, black)

Other devices unveiled at a London event yesterday include the ATIV Q convertible which dual-boots Windows 8 and Android, the Galaxy S4 Zoom smartphone/camera hybrid  and a brand new Galaxy NX interchangeable lens camera with a 4.8-inch touch screen.

Additionally, the Galaxy S3 will be given early retirement as part of Samsung’s plan to drop low-selling models to concentrate on more popular – and presumably more profitable – products.

Here’s the Galaxy S4 Zoom.

There are a number of similarities with Samsung’s current troubles and the rough waters Apple has had to navigate. Like Samsung’s leader, Apple CEO Tim Cook quickly responded to analyst claims of dropping iPhone orders by announcing all is well.

The world of FUD also has a tendency to feed on itself with negative analyst reports prompting sliding stock prices and seemingly confirming the original dire forecasts – which starts the cycle all over again.

Did Samsung think it was immune to this sort of pump-and-dump behavior?

Build the company up as invincible, attracting stock buys. Then pass on rumors of trouble, attracting stock sells.

Who wins?

The investment banks which charge fees on all stock action.

The analysts who grab headlines by adding ‘Apple’ or ‘Samsung’ to their press releases. The whip-sawed investor or the under siege tech companies?

They’re just collateral damage.

Samsung Experience Shops at Best Buy (teaser 002)

Beyond the numbers, Samsung’s reported plan to dump the aging Galaxy S3 and other less-profitable handsets only makes sense. The opportunity for growth through sales of high-end smartphones is increasingly limited.

Earlier this week, we reported in China nearly 50 percent of Samsung’s smartphone sales are in the sub $200 handsets. Apple also recognized this shift, putting increased resources into development flexible payment options for India, China and other developing nations.

IDC 20130620 (China mobile phone market forecast by screen size)

The iPhone 4 has become the introductory Apple smartphone for the low-end consumer, saving it also from retirement. Just the latest reason for our repeated urging that readers look beyond the sheer numbers for the real story of today smart device landscape.