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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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RE: Risk Taking + Innovating = Winning
By B3an on 4/27/2012 10:43:26 PM , Rating: 2
WTF? Windows Phone 7 is nothing like anything Apple have. WP7 is one of the most original and innovative OS's ever. While Android is very similar to iOS.

...Oh wait it's just a comment by Reclaimer77, no wonder it's retarded.


By Reclaimer77 on 4/27/2012 11:29:39 PM , Rating: 3
Uhh I guess we're forgetting all about WinMobile? Sure seems like MS decided to go an entirely different direction once the iPhone came out and started having success.

But anyway that has nothing to do with my main point, just a little troll bait lol.


RE: Risk Taking + Innovating = Winning
By sprockkets on 4/28/2012 1:43:53 PM , Rating: 2
He's talking about form factors, not UI designs. Read the whole post before saying stupid sht.


By ShaolinSoccer on 4/29/2012 8:57:48 PM , Rating: 2
A rectangle phone?!


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