Samsung has revealed that it will be reducing the number of models of smartphones that the company will be releasing next year.
The decision by Samsung comes as a part of its developing strategy to trim costs to combat the company's declining profit.
The number of models for next year will be decreased by between 25 percent to 30 percent, said Samsung head of investor relations Robert Yi in a presentation in New York.
Yi's remarks were confirmed by a spokesman for the company.
While the company did not reveal exactly how many and which smartphone models will be affected by the move, the reduced number of models represents a huge fall for Samsung, which has previously held a dominant position in the smartphone market.
Samsung decided to streamline its lineup of smartphones as the company looks to trim down production costs to be able to put up better competition against the cheaper smartphone models in the market, a majority of which come from smartphone makers from China such as Xiaomi.
While Samsung has so far still retained its position as the top smartphone manufacturer in the world, it has been toppled by Xiaomi as the top seller of smartphones in China.
This is a huge problem for Samsung, as the company makes 18 percent of its total sales from China.
In addition, Samsung's share of the global smartphone market has been declining. Samsung now has 25 percent of the market and Apple has 12 percent, but Xiaomi, which has only been in operations for 3 years, has already climbed to third place with 5.3 percent of the market share.
One of the major reasons for the success of Xiaomi is its Mi4 flagship smartphone that was launched back in August. The Mi4 is being tagged as a high-end but low-cost device with powerful specs that rival even those of the most high-end smartphones in the market.
Samsung posted a 49 percent decline for its net profit in the third quarter, prompting executives to rethink the company's operations and strategies moving forward.
The company's decision to trim down the number of smartphone models will allow better management of inventory and supply chains, potentially leading to reduced costs and stabilization in Samsung's profit margins. Lower marketing costs associated to marketing fewer models will also help the company bring in more profits.
The margins of Samsung from its mobile and IT business was reported as only 7 percent in the third quarter, which is the lowest figure since the end of 2008, when the company had yet to launch its very first Galaxy smartphone.
Executives of the company said that the company will be looking to maintain a double-digit percentage for its margin beginning next year.
