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Why are retailers dropping the price of the Galaxy S II?

The Samsung Galaxy S II is Samsung’s top-selling smartphone globally. In fact and things are no different in Malaysia. Everyone we spoke to either wants to get a Galaxy S II or thinks that it is a good smartphone. On the streets, we certainly see more of the Galaxy S II than its direct competitor the HTC Sensation.

So with all this popularity and brisk sales of the Galaxy S II why the sudden drop in price? This goes against everything a good marketeer knows. If there is demand, you don’t drop prices — you either maintain or bring it up. So what’s happening here?

There’s certainly no need for retailers to drop the price of the Galaxy S II to help move sales along, the device is practically selling itself. Could there be other forces that is driving the price of the device down?

There has to be. Price adjustments are “cause and effect” things. Something needs to happen for a price to drop. So what’s happening that’s causing the price of the Galaxy S II to go down? We don’t know for sure, but looking at the horizon, the price drop could mean that Samsung Malaysia is making room for another product to fill the price bracket left vacant by the Galaxy S II price drop. This is by no means a certainty but it is one very possible scenario.

Now the question is, what device will come in to be priced on top of the Galaxy S II? The obvious answer is the upcoming Nexus device that is expected to be unpacked in October 11. But we don’t think this is the case. The new Nexus device, while being manufactured by Samsung, has no place in the Galaxy product family. In terms of positioning, there is a clear distinction between the Galaxy S II and the Nexus Prime. The two devices are not complementary of each other, they are competing against one another, so its absurd to think that Samsung would drop the price of its top-selling device to make room for a competing device.

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To us, the drop in the price of the Galaxy S II indicates that Samsung is preparing for a new product to enter the market. The device will be Samsung’s new flagship Android and it will be priced at around the RM2,300 – RM2,000 mark. What device we know of that is a possible fit to this theory? The 5.3-inch Samsung Galaxy Note.

The Samsung Galaxy Note is expected to go on sale in the UK in November. Over there it will retail for £500, that’s about RM2,450 which is close to the RM2,300 to RM2,000 range we think the 1.4Ghz dual-core device will sell when it comes to Malaysia.

So that’s what we think, Samsung is dropping the price of its best-selling Galaxy S II to make room for the Galaxy Note. Of course, this is all pure speculation at the moment.