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Samsung's smartphones are selling very well

While its efforts to ban Apple, Inc.'s (AAPL) products via countersuits [1][2] aren't working out so great, Samsung Electronics Comp., Ltd. (KS:005930) has much to celebrate.  

I. Samsung Sweeps the Table With Legal, Smartphone, and Feature Phone Victories

After facing uncertainty amid an all out legal barrage from Apple, Samsung has secured victories in almost every major market by an outright denial [1][2] of Apple's requested importation bans or by securing a favorable ruling that allows it to make minor modifications and continue to sell its core lineup [1][2].  Apple's growing string of hollow Pyrrhic victories and defeats have caused some analysts to advocate that company turn its back on the late Apple CEO Steve Jobs' final solution of trying to spend Apple's fortune trying to destroy Samsung, et al.

Samsung is currently gaining significant chunks of turf in a two-front mobile phone war, as well.  On the one side it's fighting to become the king of feature phones -- the budget phones that preceded smartphones and still make up the majority of global sales.  On that front it's fighting the struggling king of budget handsets -- Finland's Nokia Oyj. (HEL:NOK1V).  On this front it's doing quite well -- Nokia's sales have slid as Samsung's have soared upwards, although Nokia still maintains a lead, for now.

Meanwhile, the South Korean firm is trying to maintain its commanding global lead in smartphone production, which it seized in calendar Q3 2011, outselling Apple by 65 percent.  According to early predictions from analysts, it looks like it's prevailing in this battle, as well.

Of course Apple let lose a the iPhone 4s, which gave Samsung a bit more competition.  But it appears that the latest and greatest iPhone hardly made a ding in Samsung's sales, and likely failed to give Apple the spark it needed to catch up in sales.

Sources close to the company indicate that Samsung will soon report a blowout holiday season, which is expected to bring Samsung's annual revenue for calendar 2011 (fiscal 2012) up 12 percent from calendar 2010.  Meanwhile annual profits are expected to surge an impressive 28 percent.

II. Apple is Winning in Profits, but is Being Marginalized by Weaker Sales

The consensus target among analysts who have study Samsung's holiday performance is that the company will post a KRW (won) 46.2T (~$37.0B USD) revenue for calendar Q4 2011 (fiscal Q4 2012) and a KRW 4.7T (~$4.1B USD) profit.  

By contrast Apple is expected to approach a profit of $9.83 USD per share (~$9.23B USD) for the quarter.  But the fact that Samsung is even half as profitable -- particularly when it is fighting a pricey global legal war with Apple and paying a reported $15 USD per smartphone to Microsoft Corp. (MSFT) in patent licensing fees -- is impressive.  Samsung used to be nowhere near this profitable, as it was known for its broad array of affordable consumer electronics and consumer handsets.

BNP Paribas and Korea Investment & Securities offer the most bullish estimate of the analysts, predicting that Samsung will report sales of 170 million smartphones for next year (calendar 2012; fiscal 2013, beware).  If Samsung indeed reports such a dominant result it may blow through next year's previous target of 150 million units.  The consensus is that Samsung likely moved 35 million smartphones, at least, over the last quarter, maintaining its global lead.

The most bullish Apple predictor among the major analysts currently is Maynard Um investment bank UBS AG (UBS).  UBS predicts 30 million iPhone 4S were sold in Oct.-Dec. 2011.  That would bring Apple's total yearly iPhone sales to 86.06 million units (a mixture of iPhone 4 and iPhone 4S units).

(Apple's average target is 28 million units.)

Epic 4G Touch v. iPhone
Samsung's lineup which includes the (Galaxy S II) Epic 4G Touch (left) is believed to have outsold Apple's iPhone 4S (right) over the holidays. [Image Source: Smart Phone Smackdown]

III. Samsung is Winning New Customers With Low Prices

Samsung is growing much faster than Apple, thanks to its more budget-friendly pricing approach.  Whereas an iPhone can cost up to $400 USD for a 64GB iPhone 4S on contract ($850 USD unlocked), Samsung's premium handsets command as little as $100 USD on contract (Wal-Mart Inc.'s (WMT) pre-order price on the Galaxy S II Epic 4G Touch

And while Apple's high price has long been associated with a certain "cool factor", Samsung has released a series of highly affective ads attacking the cultish nature of Apple's most loyal fans.  

Dude you're a barista!
Dude you're a barista! (Samsung mocks Apple "fanboys" in ad-form).
[Image Source: Samsung]

It's hard to gauge how much damage a commercial does, but if the infamous "Get a Mac" commercials made Apple seem a bit cooler in the eyes of the non technophile public, Samsung's ads certainly make obsessing over the iPhone a bit less cool.  Also, the commercials actually emphasize features found in the Galaxy S II HD and similar models, such as the higher resolution screen and faster LTE modem.

Apple is still posting dynamic growth, but Samsung is leading the Android's push to marginalize it, much as Microsoft led the push to marginalize Apple's Mac OS in the 1990s.  Samsung's lead thus could spell trouble for Apple in the long run, and Apple appears to realize it, given the desperate manner in which its fling lawsuits in Samsung's direction.

Another factor working in Samsung's favor is its release cycle.  While Apple fans must way a full year to get a technology upgrade, Samsung fans at any given month can get something that is superior to what was available just a few months before.  The more frequent release schedule means that while the gap in terms of hardware specs isn't as wide between the iPhone and Samsung's flagship models at Apple's yearly launch, that it grows quite noticeable as the year drags on.

IV. Samsung Gets Investor Nod

Investors are starting to take note of the passing of the guard as Samsung replaces Apple as the hottest thing on the market.  Samsung's stock climbed 29 percent in the past sixth months, versus an impressive, but lesser, climb of 21 percent by Apple stock.

Analysts are particularly enthusiastic about Samsung's upcoming Galaxy Note tablet-cum-smartphone, which will take bulky smartphones to new heights with a hulking 5.3-inch display.

Samsung is now Asia's most valuable technology company with a market value of ~$150B USD.  That's still less than half the market valuation of Apple -- $384B USD -- but if Samsung can pick up some more tablet market share in 2012 (currently Samsung is the top Android tablet maker), it will likely continue to see share prices rise faster than Apple's and chip away at the American electronics giant's market cap lead.  Samsung continues to dominate Android tablet sales on the high-end, though Amazon, Inc.'s (AMZN) budget-priced Kindle Fire, which features a custom distribution of Android, was perhaps an even hotter seller due to its entry-level prices.

V. Company Performs Well in Non-Phone Markets Too

Outside the phone market, Samsung is also moving aggressively to improve its position in other markets.  Like its fellow South Korean rival LG Electronics, Inc. (KS:066570) Samsung is preparing OLED flat-screen TVs for the market.  It is also working to shrink and improve its CPU manufacturing processes.  Samsung was the first ARM Holdings plc (LON:ARM) licensee to hit the 32 nm node, and it remains perhaps the top ARM chipmaker, when it comes to die-shrinks and strong production processes.

That chip-making savvy has also helped Samsung to become the only remaining profitable DRAM supplier, a position that's granting it ballooning market share.  While slowing PC sales in 2012 are expected to continue to slow the memory market, Samsung is expected to maintain modest profitability, thanks to its unique capability.

A final note is that Samsung offloaded one of its more poorly fitting elements -- an underperforming hard drive division.  That unit was sold off to the American hard-drive manufacturer Seagate Technology (STX) for KRW 500B (~$436M USD).

Sources: Reuters, Financial Times, UBS [iPhone 4S sales prediction]

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RE: Heh
By messele on 1/5/2012 3:32:35 AM , Rating: -1
Must be amusing you greatly. Trouble is Trusted Reviews are... well not that trustworthy. The sources is a company in the UK called uswitch which encourages consumer thrift. Hence the reason Samsung comes off so well and the iPhone 4 is outselling the 4S which is far from reality and only the 16Gb models seem to feature.

Android has proliferated through cheapness, nothing more.

You probably read it already but don't let that get in the way of the usual fandroid agenda.

RE: Heh
By B3an on 1/5/2012 3:49:43 AM , Rating: 5
I'd rather trust Trusted Reviews than some Apple fanboy posting a comment.

If Android has proliferated through cheapness, how is that the high-end GSII is selling so much better than any iPhone and has been since it's release in the UK in April? For well over half a year it's been outselling iPhones. Could it just be because its... better?

Not to mention, that at the very least, Trusted Reviews are atleast 90% accurate. Most of the other stats there are pretty accurate compared to other sources.

RE: Heh
By messele on 1/5/12, Rating: -1
RE: Heh
By testerguy on 1/5/12, Rating: -1
RE: Heh
By Cheesew1z69 on 1/5/2012 8:17:45 AM , Rating: 2
As for being a fan boy, well I don't really care what is better but I am irked by over-excited chimps bouncing around the place and pretty much trolling using misinformation as fact.
Pretty much like an Apple user.

RE: Heh
By sprockkets on 1/5/2012 8:05:49 AM , Rating: 2

Uh, this is the source, where are you getting uswitch?

*Statistics based on sample of 5,377 UK mobile phones sold online across major UK retailers and networks in November 2011.

You are the one making up sh!t.

Must trouble you greatly that your stupid "iphone outsells every individual android phone" isn't true somewhere.

And the sad fact is, the iphone is a good phone; the fanbois that follow apple are not.

RE: Heh
By testerguy on 1/5/2012 8:14:26 AM , Rating: 1
Read, learn, and don't insult 'fanbois' when you're in the wrong:

RE: Heh
By sprockkets on 1/5/2012 12:03:15 PM , Rating: 2
Uh, well, yeah, aside from not posting any actual figures nor does the source even cite the actual article, sure, we can take their word for it.

But that's not important. What is, is how easy it is to get fanbois like you crazy.

If you don't like it, there's appleinsider, probably where you came from anyhow. There you can fap with your buddy Daniel Dildo, who's whole existence thrives on trolling.

RE: Heh
By testerguy on 1/6/12, Rating: 0
RE: Heh
By powerwerds on 1/6/2012 12:40:52 PM , Rating: 1

I do not doubt that you may potentially possess the intelligence to stream together various data such that coherence arises.

I am going to attempt to elucidate for you the low tolerance displayed by the readership for your posts.

Firstly, do not attack other people in your posts. Disagreement without disrespect: mature. Disagreement with disrespect: childish. This, I believe, is your biggest lesson. Without its adherence, your causes may forever be for naught.

Secondly, detach yourself. You, and the other poor posters you are attempting to debate with, have so inserted yourselves into your points that the arguments have decayed into pointless ego drivel riddled with hyperbole and bullshit. If you are providing commentary, by all means, dash in the personal. If you are championing logic, display it as such. A competent purveyor of logic knows that the articles of cogency accomplish themselves irrespective of the messenger.

Thirdly, consider carefully what you are posting about. Is it important? Is it relevant? Will you be amiable, witty, informative, or dissentful? Just anything intellectually beyond debasements and insults. If you simply must debase, do it with class, as I have.

I have heretofore been polite, but frankly, Sir, you disgust me.

RE: Heh
By messele on 1/5/2012 10:57:03 AM , Rating: 1
You got me on that, I confused the link with the other one that I quoted in an earlier post (that was uswitch) though it makes little difference as the same appraisal applies to both - that is they are both portals that assist consumers in finding the best deals across phones and networks and are both used by the thrifty.

So yes, small mistake but it makes no difference when both have such a small sample of an already skewed demographic.

RE: Heh
By sprockkets on 1/5/2012 12:11:53 PM , Rating: 2
Very well. And yes, it is a small sample size.

But it is very close.

RE: Heh
By drycrust3 on 1/5/2012 2:34:14 PM , Rating: 1
Hence the reason Samsung comes off so well and the iPhone 4 is outselling the 4S which is far from reality and only the 16Gb models seem to feature.

As the old saying goes, there are lies, damned lies, and statistics. There are probably as many ways one could present smartphone statistics as there are different models of smartphone, and we can't even be sure how to define a particular model of phone.
For example, is a White iPhone 4 an iPhone 4? Some would say it is, but others would say it isn't. If it is, then is a duel SIM card Samsung Galaxy S 2 a Galaxy S 2? To me, a lot depends on whether the underlying hardware is the same, but then what if the manufacturer upgrades the hardware after several months of production, or changes the hardware to suit CDMA or LTE, does that mean that the new hardware phone sales statistics shouldn't be included in the same sales figures as the older hardware? Or what if a manufacturer sells the same hardware under a different model name (e.g. the Galaxy S 2 is sold in Japan as the NTT DoCoMo SC-02C)?
According to Top Ten website ( Apple iPhone 4 has 75 million sold, while Samsung Galaxy S 2 has 44 million sold. Of course, those are world wide for 2011. A bit more research showed that the iPhone 4 was released in 2010, thus its 75 million sales were spread over the whole of the world for all of 2011, and probably includes the iPhone 4S.
The Galaxy S 2 was, according to Wikipedia, released progressively around the world, from April 29th (in South Korea), with it being released in the USA as the Samsung Epic 4G on 16th September.
As such, one needs to ask what does one want to do with the sales figures? Is the purpose to make Apple look good? Or is it to measure the popularity of one phone over the other to end users?

RE: Heh
By messele on 1/6/2012 2:59:14 AM , Rating: 2
That top 10 website has some of the poorest grammar and use of English since ... well DailyTech.

But again they are cribbing information from Wikipedia (not automatically a bad thing) but the author has not followed the Wikipedia link to check the credibility of their source.

As you imply, it leaves yet more questions than answers though. I think we need to wait for proper sales announcements rather than speculation and hope that Samsung start to report sales into end users hands, not sales into retail channels.

"We can't expect users to use common sense. That would eliminate the need for all sorts of legislation, committees, oversight and lawyers." -- Christopher Jennings

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