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One in every four phones (of any kind) sold is now a Samsung; company earns $4.45B USD

When it comes to smartphones it's a tale of haves and have-nots.  Last year Apple, Inc. (AAPL) and Samsung Electronics Comp., Ltd. (KS:005930) (the top Android phonemaker) accounted for 90 percent of the sales of high-end handsets.  The rest of the pack was left behind, trying to peddle lower-end hardware (often lower margin), or compete for the remaining 10 percent in the high-end, high-margin market.

I. Samsung Outsells Apple in Smartphones

For companies like HTC Corp. (TPE:2498) who have watched in dismay as Apple and Samsung gobbled up their market share, Q1 2012 sadly brought little relief.  Just a week after Apple posted a record profit of $11.6B USD on a $39.2B USD revenue, Samsung responded [PDF], posting a record $4.45B USD (5.05T Won) in profit on a $39.88B USD (45.27T Won) revenue.

In Q1 Samsung was on top of the smartphone industry, beating out Apple in unit sales.

Samsung girls
Samsung's attractive models beat out Apple in unit sales. [Image Source: Shootspeak]

Of its operating profit ($5.15B USD; 5.85T Won), $3.76B USD (4.27T Won) -- roughly three quarters -- came from the company's mobile (phones, tablets) unit.  Reuters is citing experts as stating that Samsung sold 44m smartphones for the quarter.  That would put it ahead of its more-profitable rival Apple on a sales basis.  Apple sold 35.1m iPhones for the quarter, placing it roughly 25 percent behind Samsung in sales.

The numbers are particularly impressive, given that a year ago Apple was estimated to outsell Samsung nearly 2-to-1 [source].  The Samsung triumph came to incredible growth.  While Apple managed to double its smartphone sales on a year-to-year basis, Samsung more than quadrupled its sales -- a superhuman feat.

Samsung building
Samsung more than quadrupled its phone sales on a yearly basis. [Image Source: Flickr]

The strong performance by Samsung's rival wasn't altogether bad for the electronics company either.  It raked in a profit of $669.6M USD (0.76T) Won -- or half of the remaining non-smartphone profit -- from its semiconductor division.  With DRAM prices plunging to new lows, much of that profit likely comes from Samsung's lucrative contract to produce Apple's CPUs.  Nearly every iPhone and iPad sold today carries a CPU produced at Samsung's Texas plant, which is just miles away from one of Apple's largest U.S. call centers.

Despite a legal war and an ocean between them, the pair remains closely tied even as they compete fiercely on the smartphone market.

II. Samsung Takes the Crown of the World's Top Phonemaker

Samsung reached an important milestone in the first quarter, with total phone sales (including feature phones) of over 90 million units (93.5 million by Strategy Analytics’ accounting).  With Nokia Oyj.'s (HEX:NOK1V) sales plunging to 82.7m units (11.9m smartphones; including feature phones).  Samsung is outselling Nokia's smartphones nearly 4-to-1, but it's also punishing the Finnish phonemaker in the budget market.

Nokia has tried to revitalize its budget phone lineup adding smartphone-like features, as seen in its new Asha models.  But the carrier features a big problem in that feature phones -- a market it long dominated -- are a dying market.

In Q1 2011 Nokia sold an estimated 84.3m feature phones.  In Q1 2012 it sold approximately 70.8m feature phones, a drop of over 16 percent.  By contrast Samsung sold an estimated 58.1m features phones in Q1 2011, and only 49.5m in Q1 2012 -- a drop of roughly 15 percent.

Aragorn king
It's official: Samsung is king of the phone market. [Image: Peter Jackson/Newline Cinema]

In other words, Nokia and Samsung's feature phone sales are vanishing at almost the same rate, but the key difference is that Samsung more than quadrupled its smartphone sales, while Nokia saw its smartphone sales actually fall to half their Q1 2011 values.

In other words, smartphones are what won Samsung the lead, or on the flip side of the coin, what lost Nokia the lead.  

The key factor that's dragged Nokia down is the fact that it's allowed Symbian to linger around far too long.  The majority of Nokia's top 20 smartphones still run Symbian.  And yet the company has announced that the platform will be dead soon.  Consumers don't want to buy a product that's on death row, so many are opting simply to abandon Nokia.  By contrast, Samsung offers consumers one consistent option -- Android -- with the promise of long-term support.

With Samsung's highly anticipated Galaxy S3 about to drop, Samsung looks unlikely to fade in smartphone sales.

Sources: Samsung [PDF], Supply Analytics



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By mondo1234 on 4/27/2012 4:02:14 PM , Rating: 3
Here is the link, sorry.
Just different figures than Jason blogged.....

http://www.isuppli.com/Mobile-and-Wireless-Communi...


By someguy123 on 4/27/2012 9:59:04 PM , Rating: 2
According to that link they shipped 92m. Isuppli also notes that their unit count doesn't include companies who haven't posted results yet. 44M is probably samsung's estimates based on figures they receive from retailers, rounded up.


By mondo1234 on 4/27/2012 11:31:56 PM , Rating: 2
quote:
44M is probably samsung's estimates


But that is the problem, Samsung doesn't report the number of units at all. It's a financial analyst estimates based on revenue. Some manufacturers report the number of units they sold, others what they shipped, and others only the revenue and profits. Samsung reports the latter. That is why Jason states:

quote:
Reuters is citing experts as stating that Samsung sold 44m smartphones for the quarter.


rather than quote Samsung themselves. Amazon does this also, but they will say they have 50% of the Android tablet market. So that is 50% of what?

I don't know how ISuppli comes up with their data, but it is hard to refute either source. 12m unit spread is alot though. Both sources agree that Samsung sold more units than Nokia.

It doesnt matter to me who sold the most, just as long as there is plenty of competition in the market.

Bottom line is....Samsung is the only one that knows if it is winning and they aren't tellin.


By someguy123 on 4/28/2012 12:32:02 AM , Rating: 2
The reason they use estimates is because there's no system in place for 1:1 accurate reports from all retailers globally. Practically all of these reports run based on projection, or in Isuppli's case incompletely. The only place that has accurate sales reports is Japan, where they have reports coming in from retailers down to single unit counts.


By mondo1234 on 4/28/2012 1:28:00 AM , Rating: 2
quote:
The reason they use estimates is because there's no system in place for 1:1 accurate reports from all retailers globally.


Sure there is. It is inventory and accounting (receivables). Do you think Samsung relies on ATT to tell them how much money (for how many Galaxy class phones in this case) is owed when ATT sells their handsets? Samsung chooses not to disclose. Apple reports sales figures (rounded of course). Samsung should know how many were sold, returned or are stock sitting on shelves. Without that data, they never know if they are over or under manufacturing.

I would think that Samsung would know the instant a smartphone is activated. Here is a write up from news today on the subject. Seems to be of some interest at the moment.

http://www.usatoday.com/tech/news/story/2012-04-27...


By someguy123 on 4/28/2012 2:29:56 AM , Rating: 2
You're talking accounting on a global scale. Samsung sell their phones in bulk to these outlets; they are not on loan or something to be repaid during an actual sale. It's up to the retailers to create plans or market these phones themselves. At that point, each individual retailer would have its own sell through (including smaller local/national shops, not just large corporations like AT&T). In order to get 1:1 numbers they would need to contact everyone who made a direct purchase and get their unit count, or try to aggregate everyone's revenue and extrapolate themselves. It's substantially easier (if not the only practical means) for samsung and everyone else involved to have a few volunteer/paid retailers that send their sales information to be used in projections, especially if you manage to get a larger corporation like walmart on board. This is basically what NPD does on all of their sales reports.


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