Min-Jeong Lee

As the world's biggest smartphone maker tries to keep profits up in its mainstay mobile phone business, one key challenge will come from an unexpected place: the rising costs of the components that go into its devices.

Samsung's first-quarter earnings showed that its smartphone margins remained flat from 2013, highlighting the need for the South Korean technology giant to keep costs low amid uncertain demand for its new flagship Galaxy S5 smartphone. Samsung executives said that the Galaxy S5 smartphone, which officially went on sale in early April, was received positively by the market and would likely do better than the previous model, without elaborating.

But analysts said margins could well slip this quarter. The company packed its latest phone with pricey features -- such as an improved camera, a fingerprint scanner and a heart-rate sensor -- hoping to give it a leg up against a crowded field of rivals that, like Samsung's devices, run Google's Android operating system.

"Despite increasing sales volumes, a decline in profits seems inevitable due to falling prices and intensifying competition," said Greg Roh, an analyst with HMC Investment Securities in Seoul. Not helping Samsung's cause is the company's continued reliance on its massive advertising budget to keep its sales humming, and the rising cost of making its own devices.

In a few years, Samsung Electronics' new Internet-connected TVs might come with an extra function that you may not have expected: switching on and off living room lights.

“It will be a new interface that drops the usage of cursors, allowing the user to point to objects that exist beyond the TV screen,” Kim Seok-joong, the chief executive and founder of the start-up behind the technology said. VTouch executive testing the company’s gesture-control software.

Kim and his company, VTouch, are currently in talks with Samsung, bidding for a deal to supply a gesture-control software solution to the world’s top TV manufacturer. The Seoul-based startup also recently won an undisclosed amount of investment from another Samsung affiliate.

For Samsung, television sets have long been in need of a makeover that goes beyond adding curves to its design. TVs, which accounted for 17% of the company’s fourth-quarter revenue, haven’t been a profit driver for the company in a long time because of low margins and stiff competition. To bolster the company’s overall consumer electronics business, Samsung has been touting the concept of what it calls the “Smart Home,” where all electronics devices connect to each other over wireless networks, allowing the user to control them from remote places.

[March 11]