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Samsung Galaxy S III  (Source:
Samsung did well, but many worry that it won't see this amount of money rolling in next year as the smartphone market continues to grow competitive

Samsung reported strong financial earnings in the third quarter, but now faces slowed smartphone momentum in the future as the market gets more crowded.

Samsung posted $7.4 billion USD in Q3 2012 operating profit. Net profit rose 90 percent to $5.9 billion USD. 

During the third quarter, Samsung sold 56.3 million smartphones, giving it a global market share of 31.3 percent. Apple only sold 26.9 million iPhones in the same quarter. The Samsung Galaxy S III alone accounted for 18-20 million shipments from July to September.

While Samsung did well in the smartphone department, particularly with its Galaxy line of devices, it didn't do so hot in chip sales. The chip division dropped 28 percent to $1 billion USD.

Samsung rocked a healthy profit overall this quarter, but many worry that the electronics maker won't see this amount of money rolling in next year as the smartphone market continues to grow competitive.

In fact, Samsung's profit is expected to grow 16 percent next year -- down from this year's predictions of 73 percent.

Samsung has other strong businesses, like tablets and OLED TVs, but analysts say these sectors aren't quite ready to sell the way that Galaxy is selling.

Samsung's tablets, in particular, haven't been able to keep up with the like of the iPad and Kindle Fire. Now, with the iPad Mini and Windows 8 tablets making a fresh appearance into the market (not to mention Google's Nexus 7 and a refreshed Kindle Fire HD line has made its way into the market), Samsung seems to continuously fall behind.

Samsung also took a hard hit with tablets due to its patent war with Apple. Apple worked pretty hard to ban Samsung's smartphones and tablets around the world, and successfully accomplished this in countries like Germany and Australia. Samsung launched a few lawsuits of its own regarding 3G patents, and was also able to lift the ban on its Galaxy Tab 10.1 in Australia in December 2011. However, Samsung wasn't so lucky in Germany, where the Galaxy Tab 10.1 is still banned.

Back in August, a jury in the U.S. District Court for the Northern District of California reached an unfavorable verdict for Samsung, saying that the South Korean electronics maker was guilty of violating technology patents. In other words, most of Samsung's smartphones and tablets in question were found guilt of copying Apple's iPhone and iPad designs. It was ordered to pay $1.05 billion in damages to Apple.

Earlier this week, Samsung Display decided to cut ties with Apple, saying it will no longer ship LCDs to Apple next year. Its LCD shipments to Apple have been cut more and more over time due to Apple wanting huge discounts, but the recent patent infringement drama couldn't have helped either.

More recently, an ITC judge found that Samsung violated four Apple patents, including
the flat front face with wider borders at the top and bottom, the lozenge-shaped speaker about the display screen; the translucent images for applications displayed on the screen, and the device's ability to detect when a headset is plugged in.

Samsung did get a little bit of relief in the UK, though, when a judge ordered Apple to post a notice on its UK site that Samsung didn't copy the iPad. Apple complied, but in a very snarky way.

Source: Samsung

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RE: Impressive
By Tony Swash on 10/27/2012 7:46:30 PM , Rating: 2
But how are they going to make money?

A very good question. The problem mobile poses for Google, and which Android does not answer, is that all the evidence so far very strongly points towards ads per user being a lot less lucrative on mobile devices than on the desktop via a browser. This means, as internet access becomes steadily more important and prevalent on mobile devices compared to the desktop/browser, there is a tendency for the erosion of Google's revenues and margins.

For four straight quarters Googles revenue per click has fallen strongly, but this has been been offset by the growth in the scale of of ad clicks which in turn is linked to Googles focussed attempts to increase ad coverage in it's various properties and services.

But that latter process has inherent limits, the whole of the search results page cannot be ads for example, and so that limit on extending ads can only overcome the erosion of the click price for so long. In the medium to longer term Google really needs to find a way to monetize mobile, Android is not doing it for Google so far.

In the world of mobile devices only two companies are making substantial profits and that is Samsung and Apple. Both make actual devices. One buys in it's OS and ecosystem, one makes it's own, but both make devices which are sold for a profit.

The other big players are all moving towards making their own devices. Two, Google and Amazon, are doing so at costs and as a result are still not making money from mobile (note Amazon's loss this quarter). They may have to make device sold above costs to start making profits and of course Google's selling at cost has a tendency to undermine it's broader OEM family. Microsoft has just started selling it's own mobile devices and is trying to make a profit doing so.

But selling devices in large numbers and a healthy rate of profit is very hard. Apple have done it for a long time and Samsung took the only sensible option which was to initially clone Apple's efforts/products/designs in order to bootstrap it's way into a dominant position in the Android ecosystem and now can afford to (hopefully) move away from the crasser forms of copying. It seems to be doing just that no doubt nudged along by it's legal losses.

What Samsung decides to do now with it's utterly dominant position in the Android ecosystem, and how it's relationship with Google evolves, will determine what happens to Android as a whole.

"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller

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